Gold holds steady below 6-week high; Chinese demand slows

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'Gold is likely to remain pressured from traders positioning for FOMC commencing in exactly a week's time'. 'Gold is likely to remain pressured from traders positioning for FOMC commencing in exactly a week's time'.
Summary'Gold is likely to remain pressured from traders positioning for FOMC commencing in exactly a week's time'.

Gold was holding just below a six-week peak on Tuesday amid higher equities and worries that physical demand could ease due to the recent rally in prices. Platinum at the same time held near its strongest in 2-1/2 months as labour strikes were set to begin later in the week at top producers in South Africa. Investors were reluctant to take big positions in bullion a week ahead of a U.S. Federal Reserve policy meeting, when it could announce another cut to its bond-buying stimulus."Gold is likely to remain pressured in the days ahead from traders positioning for FOMC commencing in exactly a week's time," said Joyce Liu, an investment analyst at Phillip Futures.The Fed's Federal Open Market Committee (FOMC) meets on Jan. 28-29. In its last policy meeting in December, the U.S. central bank decided to cut its historic bond-buying stimulus by $10 billion to $75 billion in monthly purchases. The bond purchases had bolstered gold's position as a hedge against inflation and a weak economy, pushing prices to an all-time high of $1,920 in 2011.

However, with an economic recovery underway, prices have fallen 35 percent from those peaks. Spot gold was nearly unchanged at $1,253.60 an ounce by 0722 GMT, not far from the six-week peak of $1,259.85 it touched on Monday. Platinum was at $1,461.49, steady after sharp gains in the previous session that took it to $1,469.50 - its highest since Oct. 31. The main trade union for South African platinum miners said its members will go on strike from Thursday at the world's top three producers, hitting over half of global output. South African gold producers have also received notice from the union of the intention to strike.

PHYSICAL DEMAND---Gold purchases in China, the biggest buyer of the metal, have slowed from last week's levels as gold prices have gained for four straight weeks. Premiums for 99.99 percent purity gold on the Shanghai Gold Exchange fell to about $13 from Monday's $14, though volumes were higher. Analysts say Chinese gold imports, the lone bright spot in an otherwise disastrous year for bullion in 2013, look set to fall from last year's record levels. Three analysts expect at least a 10 percent decline during 2014, though that would still leave China's imports for the year at the second highest on record.

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