Gold dips in London

Gold hit a one-month low on Tuesday on a firmer dollar and weaker oil prices, with investors unwinding their trading positions ahead of this week's Federal Reserve meeting on interest rates. Gold often takes its cue from movements in the dollar because of its role as an alternative investment to currencies, stocks and bonds.
The outcome of the Fed meeting would set the tone for currencies and precious metals, dealers said. "Strength in the US dollar is clearly a major factor, plus we have seen a quite bit of money coming out of the StreetTRACKS exchange-traded fund. Both these things are weighing on the market," said Dan Smith, analyst at Standard Chartered Bank. "There is some indication of consumers starting to come back in at these lower prices, but we are waiting to see how powerful that would be. I am looking for prices to recover somewhat from where we are now," he said.
Gold held in StreetTRACKS Gold Shares, the world's largest gold-backed ETF, fell more than 50 tonnes in less than a week to about 591 tonnes as of Monday. Spot gold fell as low as $874.90 an ounce and was quoted at $879.10/879.80 at 1430 GMT, against $891.65/892.65 late in New York on Monday, when it hit an intraday day high of $895.50 on speculative buying driven by record high oil.
"It is following the currency and taking its lead from oil. $880 is an important area. If we hold here, then we are fine," said Peter Hillyard, head of metals sales, ANZ Investment Bank. "But if it fails, then it could drop quite dramatically." The dollar hit its highest level against the euro in nearly four weeks, on track for its largest monthly gain in nearly a year, amid expectations the Federal Reserve will signal the end of its easing campaign.
The Fed will begin its two-day meeting later on Tuesday and analysts expect the policy-setting body to cut key borrowing costs by a quarter percentage point to 2.0 percent and indicate that its rate-cutting campaign is finished for now.
A firmer dollar makes gold costlier for holders of other currencies and often lowers bullion demand. The metal is also generally seen as a hedge against oil-led inflation. Oil fell more than $2 a barrel, retreating further from a record high hit on Monday, as the dollar firmed and a strike ended at Britain's Grangemouth refinery.
"Investors wait for the US Fed's decision on interest rates. Expectations are that the Fed will signal an end to rate cuts, which will drag down gold prices," Fairfax investment bank said in a daily market report. Spot gold has been trading well below its lifetime high of $1,030.80 an ounce hit on March 17, with attempts to revisit the level resulted in heavy profit-taking by investors.
US gold futures for June delivery fell $15.50 an ounce to $880. In industry news, one mineworker was killed and two were trapped underground at Gold Field's number 10 shaft at Driefontein mine after a seismic event, the National Union of Mineworkers said, adding two workers were admitted to hospital in a critical condition.
Aquarius Platinum Ltd said it had completed the repurchase of Impala Platinum's stakes for a total consideration of $504.9 million. Impala is the world's second biggest platinum producer. Other precious metals also fell, with spot platinum slipping more than 1 percent to $1,941/1,951 an ounce from $1,964.50/1,974.50 late on Monday. Silver fell to $16.65/16.70 from $16.96/17.02 an ounce, while palladium dropped to $428.50/433.50 an ounce from $432.50/438.50 in the US market late on Monday.