Gold pared gains on Tuesday after earlier rallying to its highest in a week as data showing US producer prices and retail sales rose slightly more than expected in November lifted the dollar into positive territory. Spot gold was bid at $1,397.80 an ounce at 1612 GMT, against $1,393.15 late in New York on Monday. US gold futures for February delivery firmed 80 cents to $1,398.80.
The precious metal earlier climbed more than 1 percent to a session high at $1,407.70 an ounce as the US currency wilted ahead of a US policy-setting meeting. Policy makers are expected to assess the Federal Reserve's $600 billion bond-buying plan at the meeting on Tuesday, but are not forecast to signal any shift or change in the programme.
While it remains vulnerable to short-term currency gyrations, gold looks set to be firmly supported by caution on the global economic outlook. "Gold is benefiting on the one hand from inflation-led buying in Asia, and from safe-haven-led buying particularly in North America where there is a lack of confidence in issues like the budget deficit being solved," said HSBC analyst James Steel.
"It is benefiting for different reasons in different regions." Gold has risen by over 6 percent so far this quarter, driven largely by fluctuations in the dollar and by concerns over the outlook for growth in the United States and the eurozone's deepening debt crisis.
The euro gave up early gains that had taken it to a three-month high against the US currency on Tuesday, while the dollar index, which measures the currency's performance against a basket of six others, moved 0.1 percent higher. Silver gave up early gains in line with gold and was bid at $29.45 an ounce against $29.48, having earlier touched a high of $29.92.
Silver has been a major beneficiary of the investor push into commodities this year and the price is now holding around 30-year highs. But not all investors are as convinced that silver can maintain this performance. Platinum also rose to a one-week high of $1,713.49, before easing to show a 0.2 percent loss on the day at $1,698.49, while palladium was flat at $754.50.
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