Gold Ends Under $1,661 As Market Awaits Fed
Gold rose on Tuesday, snapping a four-day losing streak, lifted by short-covering and expected continuation of loose U.S. monetary policies.
Platinum and palladium also rebounded after Tuesday's drop as supply worries and hopes for demand recovery triggered strong fund interest. Bullion climbed a day before a Federal Reserve policy statement in which the U.S. central bank is expected to keep short-term interest rates exceptionally low until the U.S. unemployment rate falls to 6.5 percent, inflation permitting.
"What's going to come out of the Fed is more of the same, so we can just anticipate that (quantitative easing) is here at least for a little while longer," said Jeffrey Sica, chief investment officer of SICA Wealth, who oversees more than $1 billion in client assets.
Spot gold rose about 0.5 percent to trade around $1,662 an ounce, recovering from Monday's 2-1/2 week low of $1,651.93. U.S. gold futures for February delivery settled up $7.90, to end the session at $1,660.8.
Open interest in COMEX futures dropped 4 percent on Monday after four consecutive days of price decline, CME data showed, suggesting some investors were buying back their bearish bets after the sharp pullback, traders said.
A drop in the dollar index and U.S. equities' gain also boosted gold. Loose U.S. monetary policy helped drive gold to a 12th year of gains in 2012. There has been growing discomfort among U.S. policymakers about the Fed's bond buying, or quantitative easing (QE), currently running at $85 billion a month, although analysts do not expect any imminent change in Fed policy.
U.S. non-farm payrolls data on Friday will also be examined for clues on the state of the world's largest economy.
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India Silver Demand Strong
Spot silver was up 1.5 percent to $31.28 an ounce after touching a two-week low of $30.71 in the previous session. Silver mirrored gold's rise, and was also underpinned by reports that India's silver exports are expected to rise by up to 30 percent this year.
Among platinum group metals, platinum rebounded from a nearly 2 percent fall on Monday, its sharpest daily decline in more than a month. It was last up 0.9 percent at $1,674.49 an ounce.
Losses in the previous session followed news that Anglo American Platinum and labor unions in South Africa agreed to postpone a restructuring involving 14,000 job cuts to allow for more talks.
Spot palladium rallied 1.4 percent to $746.22 an ounce, having earlier hit a fresh 16-month high of $748.50. Market talk about dwindling sales from Russia's state-owned palladium stockpile and booming auto demand have spurred heavy buying by hedge funds and momentum traders, analysts said.
