PRECIOUS-Gold rallies from 2-1/2 wk low; eyes Fed meeting

Tue Jan 29, 2013 6:59am EST

* Federal Reserve policy meeting on Jan 29-30

* Investors alert to U.S. non-farm payrolls on Friday (Updates throughout, changes dateline from SINGAPORE)

By Clara Denina

LONDON, Jan 29 (Reuters) - Gold firmed on Tuesday, snapping a four-day losing streak, but gains were limited as investors sought further data to gauge U.S. economic strength, also looking to a Federal Reserve statement later in the week.

Spot gold rose 0.5 percent to $1,663.30 an ounce by 1127 GMT, recovering from Monday's 2-1/2 week low of $1,651.93. U.S. gold futures for February delivery were up 0.5 percent to $1,662.30.

Market players were keeping a keen eye on the Fed's decision and statement on Wednesday for any signs that a recent run of positive economic data had encouraged policymakers to consider changing its easing policy.

"After the losses of the past few days, there is some buying interest... we are likely to keep seeing some buying on the dips but not strong enough to support a decisive push higher," Commerzbank analyst Eugen Weinberg said.

Loose monetary policy helped gold to a 12th year of gains in 2012, as investors worried about currency debasement as a result of rampant cash printing by central banks. And most analysts do not expect the Fed to curtail its bond-buying programme any time soon.

"The U.S. Fed meeting may show the central bank continuing with bond purchases to support the nation's recovery," broker SP Angel said in a note.

U.S. non-farm payrolls data on Friday will also be examined for more clues on the state of the world's largest economy and positive numbers could lead to a more dovish Fed's stance on monetary easing, analysts said.

"All the U.S. economic data greatly influence the gold price... and should the economic recovery continue and unemployment fall, more risk appetite may be seen in the market, which could put some pressure on the gold price," Weinberg said.

Equities and other so called risk assets have attracted more investors recently, while gold lost some of its shine, as upbeat data from the world's key economies signalled that the economic recovery is gaining traction.

In the wider markets, European shares consolidated near recent two-year highs, while the euro steadied around an 11-month high hit against the dollar on Friday.

Physical buyers in Asia returned to the market when prices fell to $1,650, putting a lid on losses, traders said. But gold ETF holdings continued to fall this week.

"Traders and some investors may sell gold lower in the short term... (but) we expect to see ongoing central bank buying to offset ETF gold sales and for new ETP gold purchases in China to help balance the market," SP Angel said.

Among other precious metals, spot silver was up 0.7 percent to $31.04 an ounce, after touching a 2-week low of $30.71 in the previous session.

Spot platinum rebounded from a near 2-percent fall on Monday, its sharpest daily decline in more than a month and was last seen at $1,663 an ounce, up 0.2 percent.

Losses in the previous session followed news that Anglo American Platinum and labour unions in South Africa agreed to postpone a restructuring exercise that could lead to 14,000 job cuts to allow for more talks.

Spot palladium steadied at $736 an ounce, little changed from close's levels, having touched a fresh 16-month high of $747.50 in the previous session. (Additional reporting by Rujun Shen. Editing by Veronica Brown)