PRECIOUS-Gold snaps 4-day decline on expectations of easy money
* ECB, BOJ and BOE policy meetings due later this week
* Spot gold may rebound to $1,589/oz - technicals
* Coming Up: Euro zone Markit services PMI; 0858 GMT
(Adds details; updates prices) SINGAPORE, March 5 (Reuters) - Gold firmed on Tuesday to snap four sessions of decline, with investors expecting major central banks to stick to loose monetary policy at meetings later this week, supporting bullion's appeal as a hedge against inflation. A weaker dollar also lent support to gold, as it makes dollar-priced commodities more affordable for buyers holding other currencies. Loose monetary policies have helped gold rally the past few years, as investors fearing higher inflation as a result have parked funds in gold to hedge against rising prices. But gold's bull run wound down in the past few months as speculation mounted that the U.S. Federal Reserve may curtail its bond purchase programme sooner rather than later, as the world's top economy showed signs of recovery. Some senior Fed officials have insisted on continuing the expansionary monetary policy, arguing the economic growth was not strong enough to reinvigorate the labour market. "We are going through a very slow period and it is a situation where we need central banks to step up," said Jeremy Friesen, commodity strategist at Societe Generale in Hong Kong. "If they do, it will be good for gold." Spot gold rose nearly half a percent to $1,580.76 an ounce by 0627 GMT. U.S. gold was also up half a percent, to $1,580.30. Technical analysis suggested spot gold is expected to rebound to $1,589 an ounce, as indicated by its wave pattern and a Fibonacci projection analysis, said Reuters market analyst Wang Tao.
CENTRAL BANKS The balance sheet of the European Central Bank has effectively shrunk due to the early payment of a chunk of three-year crisis loans by banks, in contrast to the Fed's ongoing $85-billion monthly bond buying and the Bank of Japan's plan for aggressive monetary policy. If the ECB launches more stimulus, or other central banks' accommodative measures offset the ECB's de facto tightening, gold could get a boost, Friesen added. The ECB, BOJ and Bank of England will hold their policy meetings later this week, and investors are waiting to see if any further stimulus programmes are approved.
Physical buying continued in Asia, though some buyers have moved to the sidelines of the market waiting for a clear direction in prices. "We are not seeing as much buying as last week," said Brian Lan, managing director at GoldSilver Central Pte Ltd in Singapore. "Most people did their purchases last week and are now holding back, wondering whether prices will fall further, before they commit themselves to buy more." Gold contracts traded on the Shanghai Gold Exchange remained at premiums of about $20 an ounce above spot gold, luring Chinese buyers to the global market. Investors continued to exit the SPDR Gold Trust, the world's top gold-backed exchange-traded fund, which fell for the tenth straight session on March 4 to a seven-month low of 1,253.283 tonnes.
Precious metals prices 0627 GMT
Metal Last Change Pct chg YTD pct chg Volume Spot Gold 1580.76 7.42 +0.47 -5.60 Spot Silver 28.77 0.22 +0.77 -4.99 Spot Platinum 1576.75 11.82 +0.76 2.72 Spot Palladium 717.47 3.00 +0.42 3.68 COMEX GOLD APR3 1580.30 7.90 +0.50 -5.70 16042 COMEX SILVER MAY3 28.78 0.28 +0.98 -4.81 3687 Euro/Dollar 1.3036 Dollar/Yen 93.06
COMEX gold and silver contracts show the most active months
(Editing by Tom Hogue)