(Updates prices) * U.S. Fed policy decision due at 1800 GMT * U.S. economy contracts 4.8% during 1st qtr * Worldwide coronavirus cases at over 3.1 million * For an interactive graphic tracking the global spread, open tmsnrt.rs/3aIRuz7 in an external browser By Eileen Soreng April 29 (Reuters) - Gold fell on Wednesday as optimism around the easing of coronavirus-led lockdowns and hopes of a potential treatment drug propped up risk assets, while investors awaited the U.S. Federal Reserve's monetary policy statement later in the day. Spot gold fell 0.4% to $1,701.36 per ounce at 1:39 p.m. EDT (1739 GMT), having fallen for three previous sessions. U.S. gold futures settled down 0.5% at 1,713.40. "You just have the risk-on sentiment from U.S. equity markets... I think there's some profit taking in gold right now and a lot of people are getting repositioned for the next flight up in gold," said Michael Matousek, head trader at U.S. Global Investors. Wall Street jumped following an encouraging update from Gilead Sciences on a potential COVID-19 treatment and upbeat earnings. Sentiment also improved as parts of the United States, Europe and Australia gradually eased restrictions. New Zealand this week allowed some businesses to reopen. All eyes are now on the U.S. Fed, which is scheduled to release a statement at 1800 GMT, followed by a news conference by Chairman Jerome Powell. "Nobody wants to take any undue risk before that meeting so you're seeing gold drift, but once the meeting comes out and if the Fed confirms everybody's thoughts, I think you'll start to see more action in gold," Matousek said. The Fed, which has pumped trillions in emergency funding into U.S. financial markets, is expected to reiterate its promise to do whatever it takes to support the economy. The U.S. central bank may also signal how long, and by what benchmark, it plans to leave interest rates near zero after the recovery begins from what many economists forecast will be the sharpest downturn in recorded U.S. history this quarter. A Commerce Department report earlier in the day showed advanced first quarter gross domestic product fell at a 4.8% annual rate as the coronavirus-induced shutdowns at the end of the quarter shoved the longest U.S. economic expansion into reverse. "The stars seem to be aligned for gold prices. The improvement in investor sentiment, aggressive monetary policy easing, ultra-low interest rates and fiscal stimulus have all supported gold prices," ABN AMRO said in a note. Safe-haven gold tends to benefit from widespread stimulus measures as it is often seen as a hedge against inflation and currency debasement. Elsewhere, palladium gained 1% to $1,935.81 per ounce, and platinum rose 0.2% to $773.66. Silver fell 0.4% to $15.14. (Reporting by Eileen Soreng in Bengaluru Editing by Chris Reese and Alistair Bell)
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