By Sarah Turner, MarketWatch
SYDNEY (MarketWatch) — Gold futures declined during Asia trading hours Tuesday, giving back most of the previous session’s gains as caution set in ahead of a policy meeting at the U.S. Federal Reserve.
Gold futures for February delivery GCG3 -0.19% slipped $5.10 to $1,709.50 an ounce in electronic trade on the Comex division of the New York Mercantile Exchange.
The move for gold came as the ICE dollar index DXY -0.03% , which measures the greenback against a basket of six major rivals, rose to 80.343 from 80.309 in late North American trading on Monday. Read: Euro recovers losses spurred by Italian turmoil
Gold and other metals priced in dollars tend to move inversely to the U.S. unit, as they become more expensive to holders of other currencies when the dollar rises.
Still, Tuesday’s decline came on the heels of a $8.90, or 0.5%, advance to $1,714.40 an ounce during regular Monday trade in New York.
HSBC commodity strategists pinned Monday’s gains for gold to expectations of further U.S. monetary-policy easing, with the Federal Reserve set to meet Tuesday and Wednesday.
Fed officials have hinted that the central bank will carry on with long-term Treasurys purchases once “Operation Twist” expires at the end of the year, the strategists said. Operation Twist is the name given to the Fed’s policy of buying long-term U.S. securities while selling short-term ones.
“Gold is historically sensitive to changes in monetary policy, and a more accommodative policy would be bullion-friendly,” they said.
Meanwhile, the ability of the precious metal to hold onto the $1,700-an-ounce level, coupled with a drop in net-long gold speculative positions, contributes to the strategists’ favorable view on bullion, they said.
Around the wider metals complex, silver for March delivery SIH3 -0.70% traded down 27 cents at $33.11 an ounce. Copper for March delivery HGH3 -0.03% slipped 1 cent to $3.70 a pound.
March palladium PAH3 -0.70% lost $3.40 to $701.35 an ounce, while January platinum PLF3 -0.03% declined $4.20 to $1,619.10 an ounce.
Sarah Turner is MarketWatch's bureau chief in Sydney. Follow her on Twitter @SarahTurnerMKTW.
