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Gold holds steady ahead of Fed meeting

Source : REUTERS
Last Updated: Tue, Jun 18, 2013 04:51 hrs
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Gold was little changed on Tuesday as investors awaited guidance from a Federal Reserve meeting on the outlook for the bank's stimulus programme, amid some strong U.S. economic data.

FUNDAMENTALS

Spot gold was near steady, easing $0.40 to $1,383.95 an ounce by 0018 GMT. Bullion fell about 0.5 percent on Monday as U.S. stocks rallied ahead of the Fed policy meeting over Tuesday and Wednesday.

U.S. gold also marked time, rising $0.40 to $1,383.5.

Markets are closely watching for any clues on whether the Fed will wind down its $85 billion monthly bond buying program, which has supported gold prices. Recent strong U.S. data has increased speculation the Fed could taper the program soon.

The majority of U.S. homebuilders view conditions in the industry as favourable for the first time since the start of the housing crisis seven years ago, with an industry report showing confidence in the sector surged in June.

Any scale-back of the stimulus would hurt gold, which is typically seen as a hedge against inflation. Bullion is down 17 percent so far this year as investors have shunned its safe-haven appeal, while global stocks have rallied.

Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, stood at 1,003.17 tonnes on Monday -- their lowest in more than four years.

SocGen said a paradigm shift among gold investors is likely to push gold prices to $1,200 per ounce this year.

Indian gold and silver futures traded slightly lower on Monday, with subdued demand in the physical market during a seasonally slow period after a series of government measures to contain imports.

MARKET NEWS

Japan's Nikkei rose on Tuesday, heading for a third straight day of gains, which will mark its longest winning run since a sharp selloff on May 23.

The dollar index fell 0.2 percent.

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