Gold rose slightly early on Tuesday as a sharp dollar drop prompted bullion buying a day before the Federal Reserve was expected to announce another round of US government bond purchases to boost the economy. Strong physical bullion demand from leading consumers India and Turkey ahead of major gold-buying events also buoyed prices, analysts said.
The US Federal Reserve opens a two-day meeting on Tuesday that is expected to conclude with a decision to pump hundreds of billions of dollars into the tepid economy. "As long as the monetary authorities are expanding their balance sheets, the propensity for gold to move higher is... rising," said Dennis Gartman, hedge fund manager and publisher of the Gartman Letter.
Spot gold was at $1,350.69 an ounce at 12:38 pm EDT (1638 GMT). US gold futures for December delivery rose 60 cents to $1,351.20. At the two-day meeting in Washington, the Fed will consider the prospect of further government debt purchases, or quantitative easing (QE). Markets are pricing in a commitment to buy at least $500 billion in Treasury debt over the coming months.
Indian gold consumers kept buying ahead of the key Dhanteras festival, which celebrates prosperity. It is swiftly followed by the Diwali festival of light, another key gold-buying occasion for the world's biggest bullion consumer. Turkey's gold imports rose to 9.07 tonnes in October, compared with 2.45 tonnes the previous month, the Istanbul Gold Exchange said on Tuesday. Turkey is the world's third-biggest gold consumer.
Silver traded up 0.4 percent at $24.70 an ounce, off the previous session's 30-year high of $25.03 an ounce. Data from the US Mint showed its silver bullion coin sales were up nearly 20 percent in the first 10 months of this year from a year before, to 28.1 million ounces from 23.4 million.
According to The Silver Institute, based in Washington, the Royal Canadian Mint reported 2010 sales of its Silver Maple Leaf bullion coin are up 30 percent from 2009 figures to date. Platinum was trading up 0.2 percent at $1,708.60 an ounce, while palladium dropped 1.1 percent to $641.72.
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