Gold settles lower at $1,268 an ounce on mixed Fed signals

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Gold futures settled lower on Wednesday, while spot prices held steady and were supported by a drop in the dollar and bargain hunting with prices near a one-month low.

In the absence of U.S. economic data, bullion investors awaited comments from Fed policymakers, including Chairman Ben Bernanke, due to speak at 7:00 p.m. EST (0000 GMT), for clues on the longevity of the Fed's stimulus.

Bernanke's speech comes on the heels of divergent remarks by several other Fed officials.

Minneapolis Fed Bank President Narayana Kocherlakota said Tuesday monetary policy should remain accommodative, but Atlanta Fed President Dennis Lockhart did not rule out a decision to taper the bond-buying stimulus at the December policy meeting, though he also said the Fed should keep policy very easy.

The precious metal fell 1 percent in the previous session, and lost nearly 4 percent in the past four days.

Chart: Precious Metals

"Gold's negative price reaction to the possibility of a December Fed tapering indicates to us that the bullion market is likely to remain sensitive to expectations for changes in monetary policy,'' said James Steel, chief metals analyst at HSBC.

Spot gold last gained 0.2 percent to $1,270 an ounce. It was still not far from a four-week low hit on Tuesday, when it fell as much as 1.7 percent to $1,260.89, its lowest since Oct. 15.

for December delivery settled $2.80 lower at $1,268.40 an ounce. Traders said that there has been some unwinding of futures positions as participants prepare to roll over to the next trading month of February.

Technically, the metal looks supported at $1,260 an ounce, while resistance stands in the $1,277-$1,281 area, ANZ analysts said.

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