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[SINGAPORE] Gold steadied above US$1,290 an ounce on Wednesday, largely clinging to gains from the previous session, as focus turned to whether a weaker global economy may curb the US Federal Reserve's enthusiasm to raise interest rates.
The Federal Open Market Committee is scheduled to release a statement at the end of its two-day policy meeting later on Wednesday and a dovish bias could support a non-interest bearing asset such as gold.
Spot gold was little changed at US$1,291.10 an ounce by 0321 GMT, after rising nearly 1 per cent on Tuesday. Bullion hit a five-month high of US$1,306.20 last week.
The metal is consolidating at around US$1,290 ahead of the Fed's statement which may not offer any surprise, said Howie Lee, investment analyst at Phillip Futures. "I think it'll be mostly a non-event. The Fed will probably stick to the status quo and if that proves to be true then gold should continue to hover between US$1,270 and US$1,290 in the near term," Lee said.
Lee expects the Fed to remain on course to raise US interest rates by June given how the world's top economy has recovered for most of last year and with that optimism largely intact for 2015.
US gold for February delivery was also steady at US$1,290.60 an ounce.
With the US bracing for its first rate hike in nearly a decade, gold prices are forecast to fall for a third year in a row in 2015, a Reuters poll showed. But analysts say the market should also find a floor, paving the way for a recovery next year.
In the immediate term, gold is unlikely to fall below US$1,250 given buying interest from the Chinese ahead of the Lunar New Year next month, Lee said.
Gold imports from Hong Kong by top consumer China fell nearly a third in 2014, although the purchases were still the second highest on record at just over 813 tonnes.