* Early Japanese buying lifts prices after sharp drop
* Investors waiting for Fed's interest rate decision
* Euro dips, oil rises near $137 a barrel
(Updates prices to afternoon, adds quotes)
By Lewa Pardomuan
SINGAPORE, June 24 (Reuters) - Gold gained on bargain
hunting on Tuesday after falling around 2 percent in New York,
but investors may be careful about taking large positions ahead
of an interest rate decision by the U.S. Federal Reserve.
The Fed is expected to leave rates unchanged at 2 percent
on Wednesday and investors will focus on the accompanying
statement for clues on the future course of U.S. monetary
policy.
Gold <XAU=> rose to $886.30/887.30 an ounce from
$882.85/884.05 in the U.S. market late on Monday, when it
dropped to its lowest level in nearly a week at $877 after a
sudden rise in the dollar triggered selling.
Rumours that a hedge fund liquidated around 2 million
ounces of gold also contributed to the losses, according to
some dealers.
"There's some early Japanese buying. I guess most people
remain on the sidelines until the Fed meeting and in particular
the announcement to see how hawkish it would be," said Peter
Tse, a dealer at Scotia Mocatta in Hong Kong.
"I don't think much buying would be seen ahead of the
meeting," said Tse, who expected gold to trade in a range of
$875 to $890.
The euro eased to $1.5505 <EUR=>, having fallen below $1.55
after data showed German business sentiment and the euro zone's
manufacturing and service sectors contracted in June, denting
expectations of a rate hike by the European Central Bank
[].
In theory, a firmer dollar reduces gold's appeal as an
alternative investment.
"My view is there's still a chance to increase interest
rates before the end of this year," said Ronald Leung, director
of Lee Cheong Gold Dealers in Hong Kong.
"We have to stay above $910 before we can see another high
level," said Leung, who pegged support levels at $890 and $880.
Gold jumped to its highest level in more than a week at
$907.90 an ounce on Thursday before retreating and it remains
well below a record high of $1,030.80 hit in mid-March.
Oil <CLc1> added 21 cents to $136.95 a barrel on fears of
Nigerian supply disruptions and tensions between Israel and
Iran. It had hit a record high of $139.89 on June 16. []
Gold futures for August delivery <GCQ8> on the COMEX
division of the New York Mercantile Exchange added $1.3 an
ounce to $888.5.
Platinum and palladium also bounced, while silver hovered
below $17 an ounce despite early buying.
Spot platinum <XPT=> rose to $2,035.50/2,055.50 an ounce
from $2,033.50/2,053.50 late in New York. Spot palladium <XPD=>
firmed to $466.50/474.50 an ounce from $464.00/472.00.
Silver <XAG=> edged up to $16.81/16.87 an ounce from
$16.72/16.80 late in New York but was below a 3-week high of
$17.71 an ounce hit last week.
The most active Tokyo platinum contract for April 2009
delivery <0#JPL:> on the Tokyo Commodity Exchange fell 30 yen
per gram to 6,961 yen.
Precious metals prices at 0522 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 886.25 2.90 +0.33 6.43
Spot Silver 16.81 0.06 +0.36 13.81
Spot Platinum 2033.00 -0.50 -0.02 33.75
Spot Palladium 466.50 2.50 +0.54 26.77
TOCOM Gold 3105.00 -44.00 -1.40 1.47
25194
TOCOM Platinum 6961.00 -30.00 -0.43 30.38
8377
TOCOM Silver 591.80 -14.90 -2.46 9.39
766
TOCOM Palladium 1660.00 -9.00 -0.54 22.87
1238
Euro/Dollar 1.5520
Dollar/Yen 108.01
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Editing by Michael Urquhart)
