PRECIOUS-Gold edges up before Fed decision as jewellers buy

Wed Jan 25, 2012 6:53am GMT
 

* Spot gold due to correct -technicals 
    * Coming Up: U.S. FOMC rate decision; 1730 GMT

 (Updates prices, adds fresh quotes)	
    By Lewa Pardomuan	
    SINGAPORE, Jan 25 (Reuters) - Gold regained strength
on Wednesday after an early dip spurred buying from jewellers in
Asia, but prices were stuck in a range as investors awaited the
outcome of the U.S. Federal Reserve's policy meeting, which
could weigh on the dollar.	
    The Fed, which will start a new practice of announcing
policymakers' interest-rate projections, will probably conclude
the meeting with a signal that interest rates will be held near
zero into 2014, according to a Reuters poll. 	
    Any signs that interest rates will stay lower for longer
could put pressure on the dollar, and boost gold's safe haven
appeal, and prices. A weaker dollar would also make gold a more
attractive buy for investors holding other currencies.  	
    Gold added $2.29 an ounce to $1,667.89 an ounce by   	
0637 GMT, off an intraday low of around $1,664 an ounce. 	
Gold hit a 6-week high of $1,681.16 on Monday.	
    "I am not sure about India, but yes, the Indonesians have
been buying," said a dealer in Singapore, who also trades with
top consumer India. "The Thais sold gold yesterday but they also
bought back last night. Thailand is very much a market of their
own." 	
    Volumes remained thin during China's week-long Lunar New
Year holiday.	
    "We've seen light buying from Indonesia, but we are still in
a holiday mood. It looks like people will prefer to buy on dips.
Premiums for gold bars are steady at $1," said another physical
dealer in Singapore.	
    "There's not much on silver, but we will still get demand
from India or Thailand. We can't say if the demand is
exceptionally good." 	
    Silver rose 23 cents to $32.24 an ounce. It rallied
to $32.76 an ounce on Monday, its strongest since early
December.	
    	
    	
    
    Gold largely tracked the fortunes of the euro in the 	
last two months of 2011, losing some of its safe haven appeal
even as investors questioned the viability of the single
currency. Gold fell by more than 10 percent in December. 	
    The euro fared reasonably well against the dollar on
Wednesday after EU data showing surprising strength in
manufacturing and services this month held out hope that the
euro zone may escape recession. 	
    Greece kept hopes alive for a last-minute bond swap deal to 	
avoid a messy default after euro zone officials sent talks back 	
to square one by rejecting a final offer from the country's 	
private bondholders.  	
    But the International Monetary Fund said Europe's debt
crisis could tip the world economy into recession and a bigger
firewall was urgently needed to keep the damage from spreading.
 	
    U.S. February gold rose $3.5 an ounce to $1,668.0 an
ounce. 	
    "After failing to crack the upside earlier this week, there
is a chance it could take a look at support. We think that
should hold. Indian and Thai investors are buying physical
material towards the bottom of the range," ANZ said in a report.	
    "This pattern may well continue for the rest of the week,
with prices likely to trade towards the top of the band, and
possibly through it, once Chinese markets reopen next week."	
    Some Asian markets reopened on Wednesday but China and Hong
Kong remained closed for the Lunar New Year holiday.	
    Asian shares rose on Wednesday, underpinned by strong
earnings from U.S. technology giant Apple, stabilising European
money markets and falling euro zone debt yields, with investors
shifting their focus to the Fed from Europe. 	
          	
  Precious metals prices 0637 GMT
  Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1667.89    2.29   +0.14      6.66
  Spot Silver        32.24    0.23   +0.72     16.43
  Spot Platinum    1549.50    4.76   +0.31     11.23
  Spot Palladium    677.23    0.23   +0.03      3.79
  COMEX GOLD FEB2  1668.20    3.70   +0.22      6.47         7687
  COMEX SILVER MAR2  32.25    0.27   +0.84     15.51         1269
  Euro/Dollar       1.3019
  Dollar/Yen         77.93
 
  COMEX gold and silver contracts show the most active months
 
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