By Lisa Twaronite, MarketWatch
TOKYO (MarketWatch) — Gold prices rose in Asian trading Wednesday, up from a nearly three-month low hit in the previous session, as investors awaited the U.S. Federal Reserve’s rate decision and policy statement later in the session.
Gold futures rose 90 cents to $1333.70 an ounce in electronic trading on Globex.
“Physical demand for gold has picked up in China in front of the Lunar New Year, according to bullion dealers,” said Tom Pawlicki, an analyst at MF Global Holdings in Chicago.
“The New Year is on Feb 3rd, and China’s gold consumption has increased sharply its in recent years,” he said in emailed comments.
Gold also got some support from a weaker dollar. The dollar index (DXY 77.84, -0.16, -0.21%) , which compares the U.S. unit to a basket of six major currencies, was at 77.921, down from 77.973 in North American trade late Tuesday. See Currencies report for more on dollar.
A weaker dollar enhances the appeal of dollar-denominated commodities such as gold, by making them cheaper for holders of other currencies to buy.
The dollar was pressured by expectations of a further fall in Treasury yields after President Barack Obama called for a five-year freeze on domestic discretionary spending.
Obama’s State of the Union speech before Congress called for new spending on clean energy, a lower corporate tax rate and a spending freeze that he said “will require painful cuts.” Read more on Obama's State of the Union speech.
On Tuesday, gold futures had retreated to their lowest settlement in nearly three months, with the precious metal pressured by a rising dollar. Read Tuesday's Metals Stocks.
Gold for February delivery (GCG11 1,335, +2.30, +0.17%) lost $12.20, or 0.9%, to end the day at $1,332.30 an ounce on the Comex division of the New York Mercantile Exchange.That was gold’s lowest settlement since Oct. 27, when the metal closed at $1,322.60 an ounce.
