09:28 AM EDT, 07/31/2024 (MT Newswires) -- Gold traded higher early on Wednesday on rising geopolitical risk following the assassination of a leader of the Hamas militant group in Tehran, while the dollar dropped ahead of an interest-rate decision from the Federal Reserve's policy committee.

Gold for December delivery was last seen up US$14.00 to US$2,465.90 per ounce.

The rise follows on the killing of Ismail Haniyeh, head of the political wing of Hamas, from an airstrike in Tehran. While Iran and Hamas have both blamed Israel, which is at war with the Iran-backed militant group, Israel has so far offered no comment. Still, Iran Supreme Leader Ayatollah Ali Khamenei vowed to take revenge for the attack, according to reports, a step that could lead to a wider Middle East war and affect Persian Gulf oil supplies.

The Federal Open Market Committee will end its two-day meeting later on Wednesday afternoon, with the group widely expected to leave interest rates unchanged, though it could confirm market expectations for a rate-cutting cycle to begin in September.

Gold is "supported by increased tensions in the Middle East with today's FOMC meeting also in focus", Saxo Bank noted.

The ADP Employment Report on Wednesday said U.S. private sector employment rose by 122,000 positions in July, under expectations for a rise of 150,000.

The dollar moved lower early. with the ICE dollar index last seen down 0.53 points to 104.03.

Treasury yields also weakened, bullish for gold since it offers no interest. The U.S. two-year note was last seen paying 4.346%, down 2.3 basis points, while the yield on the 10-year note was down 3.2 basis points to 4.107%.