Gold snaps 3-day advance after rally

Singapore - Gold fell for the first time in four days after a rally to the highest level in almost three months as investors assessed the outlook for US monetary policy.

Bullion for immediate delivery was 0.7% lower at $1 117.64 an ounce at 09:50, according to Bloomberg generic pricing. The metal rallied to $1 128.16 on Wednesday, the highest since November 3, after Federal Reserve policy makers said they were closely tracking global developments.

“Prices have come down a bit because there’s a sell-off” after the rally, said Golf Hirunyasiri, managing director of Bangkok-based MTS Gold Group. Gold may still see some upside momentum on buying ahead of the Chinese New Year festival, he said by phone.

* Bollinger bands, developed by analyst John Bollinger, are based on historical price swings. The bands narrow and widen to reflect the size of those moves, and represent possible support and resistance levels

* Bullion remains more than 5% higher this year as volatility in equities boosted demand for haven assets.

* While Fed policy makers kept their benchmark rate unchanged on Wednesday and said they still expect to raise borrowing costs at a “gradual” pace, Fed-fund futures show there’s now an 18% chance of a rise by March, down from 25% on January 26.

* “Prices rose slightly ahead of the FOMC decision amid expectations for a more dovish Fed,” according to a report from Australia & New Zealand Banking Group. “With the subsequent language supporting those expectations, gold looks likely to trade higher.”

* Investors expanded their holdings in funds backed by gold for an eighth straight day, the longest stretch in a year. Assets rose to about 1 513 metric tons as of Wednesday, the highest since November 5, data compiled by Bloomberg show.

* Spot silver fell 0.5%, while platinum lost 0.3% and palladium was little changed.