Gold edged up on Tuesday after two sessions of losses, as the dollar and shares eased ahead of a US Federal Reserve policy meeting that may push back expectations for when US interest rates will start to rise. The Fed starts its first two-day policy meeting of the year later on Tuesday and investors expect it to acknowledge the uncertain global outlook and stick to its promise to be patient on tightening.
Spot gold was up 0.5 percent at $1,287.30 an ounce by 1418 GMT. The metal had fallen 1.6 percent in the previous two sessions on strong equities and uncertainties over the Greek election. Gold hit a five-month high of $1,306.20 on Thursday. US gold futures for delivery in February were up $8.10 at $1,287.50 an ounce. "Clearly the market is supported by good buying and feels well supported on the dips, but rallies keep fading on the upside," bullion dealer Sharps Pixley CEO Ross Norman said.
"We would need to see markets above $1,300 and around $1,350 to see the bulls comfortable again." The dollar fell up to 1 percent against a basket of leading currencies, while renewed concerns over Greece halted a rally in European stock markets. "The FOMC (Federal Reserve's Federal Open Market Committee)meeting could give a bit of a boost if the Fed acknowledges the global ... headwinds and that inflation is not a problem," Societe Generale analyst Robin Bhar said.
The Fed's timetable remains for an increase in rates by mid-year, a move that could further boost the dollar and hurt bullion, a non-interest-bearing asset. Gold will face a third year of losses, averaging $1,234 an ounce this year, as the United States prepares for its first interest rate rise in nearly a decade, a Reuters poll of traders and analysts showed.
In other news, Russia extended its purchases of the metal into a ninth straight month, data from the International Monetary Fund showed. Holdings in SPDR Gold Trust, the top gold ETF, rose 0.24 percent to 743.44 tonnes on Monday. In the physical markets, buying has slowed due to higher prices, with premiums in major trading hubs easing. In Singapore, premiums have fallen to between 70 cents and $1 an ounce, compared with $1.20 earlier this month. In Hong Kong, premiums were at 50 to 70 cents an ounce, down from $1 two weeks ago.
China's gold imports from Hong Kong fell by nearly a third to 813.13 tonnes in 2014, data showed on Tuesday. Among other precious metals, spot silver was up 0.5 percent at $17.95 an ounce. Palladium was also down 0.6 percent at $775.50 an ounce, while platinum rose 0.7 percent to $1,255.50 an ounce.
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