SINGAPORE: Gold extended gains into a second session on Thursday, as Asian stock markets fell sharply and the U.S dollar dropped to a 10-week low on persistent uncertainty over the Federal Reserve's massive stimulus programme.
Investors were still weighing the Bank of Japan's decision on Tuesday to leave its policies unchanged and Standard & Poor's Monday upgrade of the US credit outlook, viewing the moves as a sign of economic recovery and a trigger for the Fed to end its $85-billion monthly bond purchases.
"The sentiment is still very divided over whether the Fed will taper or not," said Joyce Liu, an investment analyst at Phillip Futures in Singapore.
"Due to the lack of major market-moving events, people are just trading on technicals until some senior Fed officials say something before the FOMC meeting next week," she said, referring to the Federal Open Market Committee.
Markets will watch the policy meeting on June 18 and 19 for clues on the timing of a rollback of stimulus measures. Fed officials are divided over their ultra-easy monetary policy and some warn it could stoke future inflation and financial instability.
Most economists expect the Fed to scale back the size of its bond purchases by the end of the year, and several expect reduced buying as early as September, a Reuters poll showed.
Spot gold had climbed 0.2 percent to $1,390.36 an ounce by 0634 GMT. It closed up on Wednesday after earlier losses, as US stock markets dropped sharply.
US gold fell about $2 to $1,390.10.
Spot gold is expected to test resistance at $1,402 per ounce, a break above which would lead to a further gain to $1,410, Reuters technical analyst Wang Tao said.
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