* Gold futures end highest in a week ahead of Fed
* Silver up too but more modestly despite JPM story
(Recasts and updates prices to close of U.S. session;
changes byline and dateline, previously LONDON)
By Barani Krishnan
NEW YORK, Dec 14 (Reuters) - Gold futures ended at their
highest settlement in a week on Tuesday as players hedged
against a falling dollar before a Federal Reserve policy
decision reaffirming stimulus measures for the U.S. economy.
Spot gold, which tracks trades in bullion, settled up too
but off the highs of the day.
The Fed said in its December policy statement -- its last
for the year -- that it intends to carry through with a
purchase of $600 billion of longer-term U.S. Treasuries by the
end of the second quarter, clarifying some ambiguities raised
in the market. []
The bond-buying program, expected to flood the market with
dollars, has been the biggest catalyst this year for
commodities, including gold.
The dollar initially fell against the euro on Tuesday but
rebounded after the Fed statement, which forex traders said was
also interpreted as positive for the currency, given that the
central bank did not announce further expansions in monetary
easing. []
Despite the Fed reaffirming its pledge for the $600
billion, gains and trading volumes in gold remained light as
investors generally avoided major positions ahead of the
year-end.
"The Fed gave the market what it expected to hear about
quantitative easing, but that didn't really translate into a
lot of action on gold," said Sterling Smith, an analyst for
Country Hedging Inc. in St. Paul, Minnesota.
Gold volumes on the COMEX metals division of the New York
Mercantile Exchange was just below half of the 30-day average
by 3.30 p.m. EST (1930 GMT), nearly two hours after the
market's settlement.
COMEX's February gold futures <GCG1> settled up $6.30 at
$1,404.30 an ounce, ranging between $1,392.40 and $1,408.90.
It was the highest settlement since Dec 7, when the
February contract finished at $1,409 after hitting a record
high at $1,432.50.
Spot gold <XAU=> rose to a session high of around $1,408,
from late Monday's quote of below $1,394 in New York. By 3:35
p.m., it stood at just below $1,397.
Gold has risen over 6 percent so far this quarter, driven
largely by fluctuations in the dollar and concerns over the
outlook for growth in the United States and the euro zone's
deepening debt crisis.
Silver closed up in Tuesday's session but only modestly,
despite reports that major Wall Street investment bank JPMorgan
<JPM.N> was unwinding a big short position in silver.
COMEX's March silver futures <SIH1> finished up 16.4 cents,
or 0.6 percent, at $29.788 an ounce. The contract's range was
between $29.22 and $29.985.
Spot silver <XAG=> was at $29.51 an ounce, little changed
from late Monday's $29.48.
Silver has been a major beneficiary of the investor push
into commodities this year and the price is now holding around
30-year highs. But not all investors are as convinced that
silver can maintain this performance.
"It would seem as if investors are treating silver as a
cyclically sensitive industrial metal during bullish periods
and as a 'safe' precious metal during corrections," said asset
manager Tiberius in its monthly update.
"Silver's fundamentals are poor, however, and we believe it
will tend to underperform both industrial as well as precious
metals in the months to come."
Spot platinum <XPT=> rose to $1,705.49 an ounce from
$1,695.74. Spot palladium <XPD=> rose to above $7.57 from
Monday's $754.47.
(Reporting by Barani Krishnan in New York; additional
reporting by Amanda Cooper and Jan Harvey in London;editing by
Sofina Mirza-Reid)
