Gold near 2-1/2 week low as Fed meeting looms
SINGAPORE (Reuters) - Gold edged up on Tuesday but did not break too far above a 2-1/2-week low hit in the previous session as promising U.S. economic data fuelled optimism about a stable recovery, driving investors away from safe-haven assets such as bullion.
Investors are waiting to see if U.S. Federal Reserve officials will make any pronouncements about monetary policy following their two-day meeting that will kick off later in the day, after durable goods orders beat expectations and business investment plans improved in the United States.
Most economists do not expect the Fed to curtail its bond-buying programme any time soon, but any hint that the central bank is considering it would further depress gold.
"Rates have been going up and the market is bracing itself for more hawkish Fed commentary, which is chasing people out of their recently-taken long positions," said a Hong Kong-based trader.
But gold might rebound after the Fed's meeting as the market might have priced in the hawkish sentiment, he added.
Loose monetary policy helped gold stage a twelfth year of higher prices in 2012, as investors worried about currency debasement as a result of rampant cash printing by central banks.
Spot gold inched up 0.3 percent to $1,659.51 an ounce by 0320 GMT, after four consecutive sessions of losses. It fell to $1,651.93 on Monday, its lowest since January 9.
U.S. gold was up 0.4 percent to $1,658.90.
Technical analysis suggested that spot gold could rebound to $1,669 an ounce during the day, as it did not break a strong support at $1,652, said Reuters market analyst Wang Tao.
Equities and other riskier assets have attracted investors over the past week or so, while gold lost some of its shine, as upbeat data from the world's key economies signalled that the economic recovery is gaining traction.
Some analysts, though, said the optimism might have gone ahead of itself.
"The situation in the U.S. has not changed too much and we need some time to really have confidence in the U.S. economy," said Yuichi Ikemizu, head of commodity trading, Japan, at Standard Bank, adding that Friday's U.S. employment data could shed light on the health of the economy.
The Fed has vowed to keep its rock-bottom interest rates until unemployment rate falls to at least 6.5 percent. In December, the unemployment rate held steady at 7.8 percent.
Anglo American Platinum (AMSJ.J), South Africa and labour unions have agreed to postpone a restructuring exercise that could lead to 14,000 job cuts to allow for more talks. The news sent spot platinum down 1.9 percent on Monday, its sharpest daily decline in more than a month.
The metal rebounded 0.7 percent to $1,669.99 on Tuesday.
(Editing by Tom Hogue)
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