COMEX gold rose Tuesday, sought as a safe-haven since the Madrid train bombings with its advantage over the dollar reinforced after the close, when the Federal Reserve refrained from tightening monetary policy.
Gold held strong even as the dollar cut losses before the Federal Open Market Committee concluded its regular meeting by holding interest rates at 45-year lows, as expected.
The Fed said it can be patient in ending the accommodative policy which contributed to the dollar's slide this year and made non-interest-bearing hard assets like gold more attractive by comparison.
April gold ended up $3 at $402.60, trading from $399.20 to $404.70. Estimated volume was a moderate 40,000 contracts.
Spot gold closed at $402.00/2.80, up from $399.25/9.75 late Monday. London's afternoon fix was $402.50.
"I don't think there is any other factor out there other than the fundamentals that are impacting the dollar, whether it be terrorism, the low interest rates or the twin deficits," said David Rinehimer, head of commodities research at Citigroup Global Markets.
He continued, "They are variables that are impacting the dollar and that's going to have an inverse relationship to price of gold."
Dealers said gold was in a $395-$405 range, and was joined at the hip with the euro, which rose to $1.2372 overnight, but was last unchanged from the previous close at $1.2264/69.
April gold hit a 15-year high at $432.30 on January 6 as the euro was rallying toward February's record high at $1.2927.
The dollar was plagued by security concerns as it became clearer that Islamic extremists linked to al Qaeda were behind the 10 bombings which killed 201 in Madrid last week.
The attacks swung Spanish voters against the government of the Popular Party in Sunday's general election and brought the Socialists into power.
Incoming leader Jose Luis Rodriguez Zapatero ran against Spain's role in the US-led war in Iraq and said he would probably pull Spain's 1,300 troops out of Iraq by mid-year unless the United Nations takes charge there.
With speculators having liquidated most of the record long position held in gold late last year, and geopolitical uncertainty back as a top theme in global markets, dealers saw plenty of scope for funds to play gold as a safe haven again.
"I don't think the magnitude of the long position will approach what it was last year, but I think it could start to climb a little bit," said a bullion dealer, citing "interest rates and an increase in terror around the world."
Floor brokers said a strong bullish signal would be a close above the 100 day moving average, which is a technical trend indicator on the charts, currently located at $402.80.
May silver went up 2.7 cents to $7.167 an ounce, in a $7.125-$7.21 range. Spot silver last fetched $7.13/15, up from $7.11/13 previously. The fix was at $7.155.
NYMEX April platinum fell $11.60 at $902.40 an ounce. Spot closed at $899.00/904.00.
June palladium rose $1.85 to $281.60, holding near Monday's contract high at $287.00.
Spot was last priced $277.00/282.00.
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