RTRS:PRECIOUS-Gold steady after 2-day gains, but taper worries linger
* Traders eye Fed meeting next week for stimulus outlook
* Two Fed officials say support immediate tapering
* Dollar index lower as euro close to 6-week high vs dollar
(Adds analysts' comments, updates prices)
By A. Ananthalakshmi
SINGAPORE, Dec 10 (Reuters) - Gold was steady on Tuesday
after gaining 1.3 percent over the past two days, but trading
volumes were thin as investors turned their attention to a U.S.
Federal Reserve policy meeting next week.
Volumes on the futures market and the physical market were
thin as investors waited on the sidelines for a clearer outlook
on the U.S. central bank's commodities-friendly monetary
stimulus measures.
Spot gold had eased 0.1 percent to $1,239.39 an ounce
by 0319 GMT. It had gained over the last two sessions on
short-covering, technical-selling and some fund-buying.
"The short-term bullishness is unlikely to last through next
week as speculators are likely to trade with more caution closer
to the last FOMC meeting of the year," said Joyce Liu,
investment analyst at Phillip Futures Pte Ltd, referring to the
Fed's Federal Open Market Committee.
Markets worry the Fed could decide to begin cutting its $85
billion monthly in bond purchases at the Dec. 17-18 meeting due
to recent strong economic data. The stimulus has supported gold
prices as it boosts the metal's inflation-hedge appeal.
Gold has lost about a fourth of its value this year on fears
the bond purchases would be scaled back.
In comments made on Monday, two Fed officials also supported
market views that the bank was close to tapering.
St. Louis Fed President James Bullard said the Fed could
slightly reduce its monthly bond purchases this month in
reaction to signs of an improved labour market.
Dallas Fed President Richard Fisher said he will urge his
colleagues at the Fed's meeting next week to begin trimming
their bond-buying program immediately.
DOLLAR WEAKNESS
The euro stayed well-bid on Tuesday, scaling a fresh
five-year high on the yen and a six-week peak against the dollar
as expectations for further stimulus from the European Central
Bank continued to fade.
A weaker greenback could support gold by making the
dollar-denominated metal cheaper for holders of other
currencies.
"In the current environment, it appears further USD weakness
is likely. This should provide some support for bullion," HSBC
analysts said in a note.
"Beyond that, we believe gold prices are more likely to stay
in a tight trading range in the near-term, barring any major
economic surprises."
PRICES AT 0319 GMT
Metal Last Change Pct chg YTD pct chg
