Gold inched lower on Wednesday ahead of the US Federal Reserve meeting, with investors looking for clues to the dollar's direction, which may influence precious metals prices.
Spot gold edged down to $683.65/684.15 an ounce by 1432 GMT, against $684.30/685.80 in New York late on Tuesday, when it dropped more than $4 on a stronger dollar.
"At the moment, I wouldn't think that people would take a lot of positions ahead of the Federal Reserve meeting," said Michael Widmer, director of metals research at Calyon Corporate and Investment Bank.
"It would be interesting to see whether they say something about the slowdown in US economic growth and I think that would be interpreted by the gold market as a hint towards lower interest rates, which would be negative for the dollar and that would be very bullish for gold," he said.
The dollar broadly steadied against major currencies ahead of the meeting, due at 1815 GMT. Along with the Fed, the European Central Bank (ECB) and Bank of England will also set rates this week.
The Fed is widely expected to keep rates unchanged at 5.25 percent on Wednesday but investors will look to the policy statement to see if the emphasis has shifted from controlling inflation to acknowledging signs of weaker economic indicators and a slowdown in the housing market.
"We are building another base here. Barring anything remarkably untoward happening, we should be looking to see $700 within the next four to six weeks," said a metals analyst in London, referring to gold prices.
He expected the dollar to weaken against the euro this week. A lower greenback makes dollar-denominated assets such as gold cheaper for investors holding other currencies.
In other metals, platinum fell to $1,324/1,329 an ounce from $1,333/1,338 in New York, when it jumped to its highest since late November at $1,340.
Concern over supplies eased, with South Africa's Northam Platinum Ltd saying on Tuesday that striking workers were due to return to work after a court ordered miners to end their work stoppage, which has hit output.
Still, platinum was expected to be supported by views that the launch of exchange-traded funds (ETFs) would draw steady demand for the white metal. London-based ETF Securities said it was launching its five bullion funds based on physical metals, already listed in London, on the Deutsche Borse on Wednesday.
The London platinum ETF has so far accumulated about 8,370 ounces of metal since its launch. For details on ETFs, please double click on. Switzerland's Zurich Cantonal Bank is scheduled to launch ETFs in platinum, palladium and silver by Thursday. Palladium fell to $368.50/382.50 an ounce from $370/374, while silver was down at $13.35/13.38 an ounce from $13.48/13.51.
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