Gold price hike

Gold and silver tumbled on Tuesday as investors sold on uncertainty about the direction of monetary policy in the United States, but a softer dollar helped support prices and sentiment. Gold hit a record high of $1,518.10 a troy ounce on Monday. It was last bid at $1,504.36 from $1,508.45 on Monday. Spot silver ceded nearly 5 per cent to $44.61 an ounce after touching $49.31 an ounce on Monday, within reach of $49.48 hit in January 1980. It was bid at $45.77 an ounce at 1143 GMT from $46.90 late in New York on Monday and is heading for its biggest daily loss since March 15. ‘The rally has been strong, it’s not surprising to see profit-taking ahead of the FOMC meeting,’ said Peter Fertig, a consultant at Quantitative Commodity Research. ‘Markets expect it will be a dovish statement from the US Fed, but there are worries about them ending (Quantitative Easing) ahead of time.’ Tighter US policy would mean less cash floating around the financial system looking for a home and fewer worries about inflation, which investors protect against by buying gold. The Federal Open Market Committee meeting starts later on Tuesday and concludes on Wednesday. The US central bank is expected to confirm it will stick to plans to complete a $600 billion bond-buying program. The post-meeting news conference by Fed chairman Ben Bernanke on Wednesday will be the first regularly scheduled briefing by a Fed chief in the bank’s 97-year history. ‘The ... meeting is a possible event risk but we believe post-meeting comments will confirm that US short-term rates will remain low for the time being which would be positive for precious metals,’ Credit Suisse Private Banking said in a note.