MW: Gold rises on weaker dollar ahead of Fed decision
By Moming Zhou, MarketWatch
NEW YORK (MarketWatch) -- Gold futures ended slightly higher Tuesday as the U.S. dollar fell against its major rivals on expectations that the Federal Reserve will cut its key interest rate.
Gold for February delivery, the most active contract, finished up $6.20, or 0.7%, at $842.70 an ounce on the Comex division of the New York Mercantile Exchange.
The December contract, which expires on Dec. 29, also moved higher. Open interest, or the number of outstanding contracts of the December contract, stood at 831 as of Monday, or 83,100 ounces, according to Comex data.
With the Fed's decision on monetary policy looming, "markets went into a holding pattern," said Jon Nadler, senior analyst at Kitco Bullion Dealers.
The Federal Open Market Committee is expected to cut its key interest rate by half a percentage point, to 0.5%, as it concludes a two-day meeting Tuesday afternoon. The U.S. dollar has been losing ground against its major rivals on widespread expectations of the rate cut, effectively boosting dollar-denominated gold prices.
The dollar index , which tracks the value of the greenback against a basket of other major currencies, fell 0.8% on Tuesday. The greenback and dollar-denominated gold prices often move in the opposite direction. Currencies.
The precious metal gained 9% last week, the biggest weekly advance in nearly three months. On Monday, the benchmark contract rallied 2% to close at $836.50, the highest level in two months.
Still, gold is about 17% lower than its record high above $1,000 an ounce, hit last March.
In spot trading, the London afternoon gold-fixing price -- a benchmark for gold traded directly between big institutions -- stood at $838.25 an ounce Tuesday afternoon, up $12.25 from Monday afternoon.
Holdings in the SPDR Gold Trust, the largest gold exchange-traded fund, stood at 765.23 tons on Monday, up 3.06 tons from a day ago, according to the latest data from the fund. The SPDR Gold Trust added 0.3% to $82.86.
As for trading in other metals, March silver futures fell 0.8% to $10.705 an ounce. January platinum gained 1.2% to $849.50 an ounce, and the March contract for sister metal palladium rose slightly to $177.55 an ounce.
March copper lost 1.9% to $1.3785 a pound.
On the equities side, the Amex Gold Bugs Index , which tracks the share prices of major gold companies, added 1.9% to 278.83.
The iShares Gold Trust , an exchange-traded fund, rose 0.3% to $82.90, while the iShares Silver Trust ETF gained 0.1% to $10.56. The Market Vectors-Gold Miners ETF advanced 0.5%, reaching $30.51.
