Gold inched lower on Wednesday

Gold inched lower on Wednesday as investors awaited the outcome of the U.S. Federal Reserve’s policy meeting, which could weigh on the dollar, but purchases from jewelers prevented prices from falling further.

The Fed, which will start a new practice of announcing policymakers’ interest-rate projections, will probably conclude the meeting with a signal that interest rates will be held near zero into 2014, according to a Reuters poll.

Any signs that interest rates will stay lower for longer could put pressure on the dollar, and boost gold’s safe haven appeal, and prices. A weaker dollar would also make gold more attractive to buy for investors holding other currencies.

Gold lost $1.26 an ounce to $1,664.34 an ounce by 0322 GMT, but was off an intraday low of around $1,664 an ounce. Gold hit a 6-week high of $1,681.16 on Monday.

Volumes remained thin during China’s week-long Lunar New Year holiday.

“We’ve seen light buying from Indonesia, but we are still in a holiday mood. It looks like people will prefer to buy on dips. Premiums for gold bars are steady at $1,” said a physical dealer in Singapore, who also trades with main consumer India.

“There’s not much on silver, but we will still get demand from India or Thailand. We can’t say if the demand is exceptionally good.”

Silver was steady at $32.11 an ounce. It rallied to $32.76 an ounce on Monday, its strongest since early December.

Gold largely tracked the fortunes of the euro in the last two months of 2011, losing some of its safe haven appeal even as investors questioned the viability of the single currency. Gold fell by more than 10 percent in December.

The euro fared reasonably well against the dollar on Wednesday after EU data showing a surprising strength in manufacturing and services this month held out hope that the euro zone may escape recession. <USD/>

Greece kept hopes alive for a last-minute bond swap deal to avoid a messy default after euro zone officials sent talks back to square one by rejecting a final offer from the country’s private bondholders.

But the International Monetary Fund said Europe’s debt crisis could tip the world economy into recession and a bigger firewall is urgently needed to keep the damage from spreading.

U.S. February gold hardly moved around $1,665.3 an ounce.

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Tags: Gold analysis, Gold future prices, Gold futures, Gold investment, Gold news, Gold price, gold price forecast, Gold prices, price of gold, Spot gold, Spot gold price

Posted by admin on Jan 25 2012. Filed under Gold price. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry