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Gold advanced to trade near a 13-month high on Tuesday, supported by a struggling dollar and hopes the U.S. Federal Reserve will not raise interest rates as soon as next week’s meeting.

The non-interest yielding metal could test $1,300 an ounce, more than 2 percent higher than its current level, if the Fed stands pat at the March 15-16 policy meeting, said Daniel Ang, analyst at Phillip Futures in Singapore.

“A lot of traders are trying to anticipate a ‘no rate hike’ scenario, causing a bit of an increase in gold,” said Ang. He added that a shaky global economy and the recent strength in the U.S. dollar, which had curbed U.S. exports, could convince the Fed to hold rates steady.

The dollar has been struggling to find traction despite a robust U.S. February employment report on Friday, its losses extending this week as a rally in oil prices rekindled demand for the euro and commodity-sensitive currencies.

That has benefitted gold along with fairly low market expectations that the Fed will raise interest rates again next week after lifting them for the first time in nearly a decade in December.

Indian Gold ETFs grow 9.4% in Feb; highest jump in 30 months. Gold exchange traded funds, or ETFs, posted their highest jump in 30 months in February, growing 9.4%, or by Rs 5.76 billion, to Rs 66.72billion, thanks to MTM gains from a rise in underlying asset values, according to rating firm CRISIL.

Gold prices, as represented by CRISIL Gold Index, rose 12.34% in the month due to a strong domestic demand and a firm global trend. The category, however, continued to witness outflows - for the 33rd month in a row.

Currently, gold rises 0.76% to 1273.70, quickly fading a spike to 1275.70 seen some minutes ago. The bullion found strong bids near 1266 region and regained momentum thereon, now extending higher towards thirteen-month highs of 1279.90.

A renewed rally in the precious metal can be attributed to the persistent risk-off market profile, especially after the poor Chinese trade data reinforced China slowdown fears and rattled investors’ confidence yet again. While, fading Fed rate hike bets at its March 16 meeting, also contributes to the upsurge in gold.

Adding to this, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund continues to remain near the highest since September 2014 at 25.5 million ounces.

The metal has an immediate resistance at 1280 (round number) and 1286.76 (daily R3). Meanwhile, the support stands at 1267.17/66.33 (1h 50-SMA/ daily low) below which doors could open for 1260 (psychological level).

The Financial Express, Commodity Online, Reuters, FXStreet