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Gold steady above $1,710/oz ahead of Fed meeting

Source : REUTERS
Last Updated: Tue, Dec 11, 2012 03:30 hrs
Canadian and Austrian gold coins are seen in New York

Gold held steady above $1,710 an ounce on Tuesday ahead of a U.S. Federal Reserve meeting where policy makers are expected to announce more stimulus measures, seen to support gold's appeal as a hedge against inflation.

FUNDAMENTALS

Spot gold was little changed at $1,710.70 an ounce by 0030 GMT, after rising to a one-week high of $1,717.20 in the previous session.

U.S. gold traded nearly flat at $1,713.

Many economists think the U.S. central bank will announce monthly bond purchases of $45 billion after its policy gathering on December 11-12, signalling it will continue to pump money into the U.S. economy during 2013 in a bid to bring down unemployment.

The U.S. budget talks dragged on. The White House and House of Representatives Speaker John Boehner's office held more negotiations on Monday on ways to break the "fiscal cliff" stalemate, although neither side showed any public signs that they were ready to give ground.

Economic growth appears to be gathering traction in the United States and Britain, while China and Italy may be about to turn up, the Organisation for Economic Co-operation and Development said on Monday.

Italian Prime Minister Mario Monti's surprise announcement on his imminent departure sparked worries on who will lead the euro zone's third-largest economy out of the debt crisis. On Monday, Italian borrowing costs soared and share prices tumbled.

Holdings of gold-backed exchange-traded funds edged down to 76.177 million ounces on December 9, after hitting consecutive record highs.

Spot platinum edged down 0.1 percent to $1,616.27, off Monday's high of $1,625, its highest since mid-October.

Spot palladium rose to a near three-month high of $702.5 in the previous session, and eased to $698.50.

MARKET NEWS

U.S. stocks edged higher on Monday as technology shares bounced back after recent weakness and McDonald's posted strong monthly sales.

The euro extended its recovery from a two-week low on Tuesday as nerves calmed over Italy's latest political turmoil and the prospects of more stimulus from the Federal Reserve pinned down the dollar.

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