Singapore: Gold steadied above $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 $1,291.10 an ounce by 0321 GMT, after rising nearly 1 percent on Tuesday. Bullion hit a five-month high of $1,306.20 last week.
The metal is consolidating at around $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 $1,270 and $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 $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 $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.