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* Gold, silver, platinum hit one-week highs
* Policy in focus
* Coming up: U.S. FOMC rate decision; 1915 GMT
(Updates with comment, refreshes prices)
By Amanda Cooper
LONDON, Dec 14 (Reuters) - Gold rallied to its highest in a
week on Tuesday, as a dip in the dollar ahead of a U.S.
policy-setting meeting and ongoing concern about the health of
the global economy encouraged investors to buy bullion.
The Federal Reserve gathers for a one-day rate-setting
meeting on Tuesday at which policy makers are expected to assess
the central bank's $600 billion bond-buying plan, but are not
forecast to signal any shift or change in the programme.
The euro <EUR=> rose for a second day, shaking off the
possibility that the European Central Bank might consider asking
for an increase in its capital to help cope with the rising cost
of fighting the euro zone debt crisis. []
Spot gold <XAU=> rose to a one-week high of $1,407.70 an
ounce, before easing to $1,405.25 by 1232 GMT, up 0.9 percent
from the previous close. U.S. gold futures <GCG1> rose 0.6
percent to $1,406.90.
The dollar remained under pressure after losing almost 1
percent against a basket of major currencies on Monday, pushing
the euro <EUR=> to three-week highs. []
As long as concern persisted over the outlook for growth in
the United States and the euro zone, gold will likely remain on
an uptrend, analysts said.
"Based on what we know today, the market remains with legs
and the fundamental thing that underpins it is, whatever
happens, good news always seems to be temporary," said Peter
Hillyard, director, commodity sales at ANZ.
"You get good news for the dollar or good economic news and
... it just gives everyone a bit of a breather. Generally,
people think there is a real malaise in the system, that there
are fundamental, endemic problems and that bodes well for gold."
Gold has risen by over 1 percent so far this month, driven
largely by fluctuations in the dollar and by the concern over
the outlook for growth both in the United States and in the euro
zone, which continues to grapple with its deepening debt crisis.
YIELD BARRIER
Yet a near half-percentage point rise in Treasury yields
<US10YT=RR> this month presents a serious challenge to investors
in gold, which bears no interest and incurs a higher opportunity
cost as returns on other asset classes increase.
While weakness in the dollar usually acts as a catalyst for
bullion buying, soft investor demand, as evidenced by continued
outflows from some of the world's largest exchange-traded
precious metals funds, could temper price gains in gold.
"Gold is somewhat mixed at the moment. Some of the
fundamentals are supportive," said Dan Smith, an analyst at
Standard Chartered, who noted the slowing in IMF bullion sales
as being a positive for the market
"Some of the recent fundamental data has been mixed so the
inflows into the physical ETFs were quite poor through Q3 and
have been in recent days," he said, adding: "It's difficult to
be super bullish at this point given the drivers."
Silver <XAG=> was set for a second consecutive daily rise,
up by over 1 percent, largely overlooking a report in Britain's
Financial Times newspaper that JPMorgan Chase & Co. <JPM.N> had
cut a large position in the metal.
The FT, citing a source familiar with the situation, said
the company's silver futures position would be "materially
smaller" in the future. The company declined to comment.
[]
The spot price was last at $29.80, up 1.1 percent, pushing
the gold/silver ratio below 48.0 to its lowest since February
2007.
Silver has been a major beneficiary of the investor push
into commodities this year and the price is now holding around
30-year highs, having almost doubled in 2010 and pushing the
ratio of silver to gold to multi-year lows.
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.
"Thus, silver seems to be profiting in both scenarios.
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."
Platinum <XPT=> also rose to a one-week high of $1,713.49,
before easing to show a 0.7 percent gain on the day at
$1,706.74, while palladium <XPD=> rose 0.4 percent to $757.15.
(Additional reporting by Rujun Shen in Singapore; editing by
Keiron Henderson and Alison Birrane)
