NEW YORK (Reuters) - Gold edged up on Tuesday as weak U.S. consumer confidence boosted speculation of new stimulus from the Federal Reserve, but some analysts warned of a possible sell-off if the U.S. central bank does not commit to more monetary easing.
Bullion climbed slightly on a weak dollar as investors expected the Fed may unveil another round of stimulus at the annual symposium of central bankers and finance ministers in Jackson Hole, Wyoming. Fed Chairman Ben Bernanke is due to deliver a speech on Friday.
Gold investors could quickly unwind bullish positions if Bernanke does not signal readiness to launch a third round of government bond buying, or quantitative easing, analysts said.
"Gold prices could correct, possibly abruptly and steeply, should Bernanke's speech again hint of distancing the Fed from further monetary policy easing," said James Steel, analyst at HSBC.
Spot gold was up 0.1 percent on the day at $1,666.01 an ounce by 1:57 p.m. EDT (1757 GMT), hovering near a 4-1/2 month high at $1,676.45 on Monday.
The metal has gained 5 percent in the past nine sessions.
Spot prices have narrowed their gap with futures after a wave of selling sent spot bullion lower after Monday's futures settlement.
U.S. COMEX gold futures for December delivery settled down $5.90 an ounce at $1,669.70, and trading volume was on track to finish below its average, preliminary Reuters data showed.
Silver climbed 0.5 percent at $30.85 an ounce.
Sentiment in the gold market also received a boost after a report showed the U.S. consumer confidence deteriorated in August to the lowest in nine months as Americans were more pessimistic about labor market prospects.
A patchy run of U.S. economic data and comments from Fed policymakers that the fragility of the recovery may warrant more easing to keep interest rates low has pushed equities to four-year highs and lifted gold, a traditional inflation hedge.
Fed policymakers were still weighing options and have not yet agreed to more stimulus, said Dallas Fed President Richard Fisher, who opposes more easing.
Despite uncertainty in recent weeks, investors have gradually increased gold ownership. Holdings of gold in exchange-traded products hit a record 71.53 million ounces on Friday, driven by a broad-based flow of metal into most of the major ETPs monitored by Reuters.
Adding to the bullish undertone in the gold market was concern about supply from South Africa, which has 80 percent of the world's platinum and also a major gold producer. Tension in the country's mining industry has run high after deadly violence at Lonmin's (LMI.L) Marikana mine.
Platinum group metals investors took profits after their recent run-ups. Spot platinum was down 1.5 percent at $1,514.25 an ounce, while palladium dropped 1.8 percent to $634.08 an ounce.
Additional reporting by Amanda Cooper and Jan Harvey in London; Editing by David Gregorio and Marguerita Choy