Commodities: Gold firm ahead of Fed meeting, greenback on the back foot

The gold market was fairly subdued on Tuesday as investors await the conclusion of the US Fed's two day meeting, while the dollar retreated during the day's trading.

Spot gold was stuck in a a tight $4 range from $1,306 to $1,310, but ended the day 0.13% lower to $1,306/Oz by 1745 BST. The December contract was flat at $1,309/oz..

ABN Amro analyst Georgette Boele said, "Investors have a tendency to stay on the sidelines ahead of the Fed and other important events, so that trading becomes more technical," adding, "If the Fed were to sound more hawkish this will likely push gold below $1,300 temporarily."

The US central bank is also expected to announce moves to reduce its $4.5 trillion asset portfolio, built up to spur economic growth in the wake of the financial crisis that began a decade ago.

"Normally you would expect gold to suffer from a reduction of the balance sheet, as it benefited when it was increased," Capital Economics analyst Simona Gambarini said.

"But as the Fed has been quite open about its intentions to make this happen, I don't think, unless it announces that it intends to reduce by a lot more than markets expect, that that will happen."

In other precious metals, silver was up 0.01% to $17.22/Oz.while platinum was down 1.38% to $948/oz. as the sell off continues from it's September high of $1,023.

Palladium was 2.77% down on the day to $912/oz. after hitting it's month low at $908/oz.

Base metals saw a quiet day for copper as it traded only 0.02% up at $6,535/ tonne as traders are awaiting the outcome of the US Federal Reserve meeting this week for signs of the near-term direction for the dollar.

"It feels as if the market has gone into a stand aside mode.. with the three months prices doing relatively little and looking for direction," said Kingdom Futures in a report.

Copper production is said to rise in Peru, the world's second biggest producer, from 2.35m tonnes to 3m by 2021, the country's energy and mines minister said on Tuesday.

Oil prices edged off recent highs ahead of inventories figure due on Wednesday from the US.

December WTI has been stuck in a $50.19/51.14 range since Thursday and traded 0.73% lower to $50.29/barrel by 1811 BST, while benchmark brent crude for January was up 0.75% to $54.68/barrel.

The market, however, remained buoyant ahead of Friday's meeting between the Organization of the Petroleum Exporting Countries (OPEC) with non-OPEC producers to discuss progress of their 1.8m barrel per day supply cut.

"It feels kind of like positioning ahead of tonight's report but there's not a lot of action behind the move," said Phil Flynn, analyst at Price Futures Group in Chicago.

In the grains market, November soybeans were 0.48% lower at $9.64/bushel, while corn for December delivery was down 1.11% to $3.48/bushel. December New York cotton was 0.28% higher on the day to $0.6970/lb.