Precious Metals Rise

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January 30th, 2013

GOLD has gained for the first time in five sessions after some weak US economic data underlined the view that the Federal Reserve may hold to its current stimulusprogram.

The most actively traded contract, for February delivery, on Tuesday rose $US7.90, or 0.5 per cent, to settle at $US1,660.80 a troy ounce on the Comex division of the New York Mercantile Exchange.

Gold prices had fallen for four consecutive sessions, as some investors moved to the sidelines ahead of this week's Federal Reserve policy meeting.

This month's release of minutes from the central bank's December gathering slammed the gold market, as the details showed some policymakers favoured pulling the plug on its stimulus efforts before the end of the year.

Signs of improvement in the US economy have raised doubts about the duration of the Fed's stimulus.

But separate reports on Tuesday showed that US consumer confidence in January and home prices in November fell, drawing buyers back to the gold market.

The data bolstered speculation the Fed was unlikely to change course in its policy statement, expected Wednesday.

"The gold market's watching this more closely than any other market," said Frank Lesh, a broker with FuturePath Trading.

"I don't think (Fed policymakers) are going to change their tune a whole lot at the moment."

The Federal Reserve meeting began as scheduled on Tuesday after the Comex close.

The Fed's easing programs, including the current, $US85 billion ($A82.07 billion) a month bond-buying effort, have boosted gold as investors sought a hedge against the inflation that can follow easy-money policies.

Settlements (ranges include open-outcry and electronic trading):

London PM Gold Fix: $1,663.50; previous PM $1,656.50

Feb gold $1,660.80, up $7.90; Range $1,653.50-$1,665.00

Mar silver $31.184, up 40.4 cents; Range $30.850-$31.470

Apr platinum $1,678.90, up $16.70; Range $1,662.70-$1,682.80

Mar palladium $749.75, up $9.20; Range $734.40-$750.90