Gold futures in New York were slightly higher early on Tuesday, as bullion investors stayed on the sidelines ahead of the US Federal Reserve rate-setting decision which could set the near-term direction for gold.
However, analysts said they expect gold to be whipsawed by a weak dollar due to the anticipated rate cut, and weakened demand for crude oil because of the increasing risk of a slowing US economy. At 10:31 am EST (1531 GMT), most-active February gold on the Comex division of the New York Mercantile Exchange was up 80 cents to $814.30 an ounce, trading between $809.0 and $816.30.
Frank McGhee, head precious metals trader with Integrated Brokerage Services in Chicago, said Monday's solid gains were due to a rally ahead of an expected rate cut, and that trading was light on Tuesday. "Precious metals had some very constructive technical breakouts yesterday. The market is pausing ahead of the Fed number. And if the Fed eases as expected, then it will be supportive for a continued rally. If the Fed would not ease, which I don't see happening, then you could expect a correction back," McGhee said.
He said precious metals futures rose further on Monday after breaching resistance above $810 an ounce for gold and $14.60 for silver. Heavy funds buying on Monday sent the February contract to a two-week high at $818 an ounce. Spot gold was quoted at $808.40/809.10 an ounce, compared with $808.00/808.70 in New York Monday afternoon. London bullion dealers fixed the afternoon spot reference price at $808.75.
Comex March silver was down 3.0 cents to $14.820 an ounce, trading between $14.710 and $14.920. Spot silver was quoted at $14.65/14.70 an ounce, compared with $14.66/14.71 late Monday in New York. London silver was fixed at $14.615. Nymex January platinum was up $2.90 at $1,469.20 an ounce. Spot platinum was quoted at $1,460/1,465. March palladium inched up 55 cents at $349.90 an ounce. Spot palladium fetched $344/348.
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