* Brighter U.S. economic outlook trims gold's appeal
* India jewellers strike in third week, cuts imports
* Coming up: minutes of Federal Reserve meeting, 1800 GMT
By Michelle Martin
LONDON, April 3 Gold held near $1,675 an ounce
on Tuesday as investors took to the sidelines ahead of the
release of minutes from the Federal Reserve's latest policy
meeting, which will be closely watched for clues on the
direction of U.S. monetary policy.
Ultra-loose monetary policy was a key factor in sending gold
to record highs in 2011. A recent raft of firmer-than-expected
U.S. economic data has curbed expectations for a fresh round of
quantitative easing, which has put the brakes on gold's climb.
Spot gold was down 0.1 percent at $1,674.69 an ounce
at 1142 GMT, while U.S. gold futures for April delivery
were down $3.10 an ounce at $1,676.60.
"I think we're in a bit of a soft patch for investment
demand in the gold market, just given the lack of movement that
we're likely to see from monetary authorities over the course of
the next quarter," Deutsche Bank analyst Daniel Brebner said.
The minutes of the Fed's March meeting due later are
expected to offer further insight on how actively the central
bank is considering additional steps to boost growth. Fed
policymakers on Monday signaled little appetite for further
monetary steps to stimulate U.S. growth in an economy that is
Prices have fallen around 6 percent since expectations that
the Fed would launch another round of asset-buying pushed gold
to $1,790 at the end of February, its highest since November.
"We consider the drop in the gold price to be a buying
opportunity as we expect the U.S. economy to surprise on the
downside over coming months, which should result in the
implementation of (a third round of quantitative easing),"
Societe Generale analyst Robin Bhar said in a note late on
"We adhere to our medium-term bullish stance. The markets
remain concerned about the possibility of further quantitative
easing/liquidity increases in Europe and the U.S., allied to
negative real interest rates worldwide," he added.
RISK APPETITE INCREASES
Demand for other safe haven assets weakened on Tuesday, with
German government bonds falling after solid U.S. and Chinese
economic data made low-risk assets look expensive to some
investors, but losses were seen limited by a weaker euro zone
World stocks were flat after rising for the third straight
day in early trade, and copper hit its highest level in nearly
two months as investors' appetite for risky assets improved
following solid U.S. and Chinese manufacturing data.
The dollar was flat after falling to a one-month low against
a basket of currencies earlier on Tuesday, pressured by its fall
to a three-week low versus the yen and a recovery in the euro. A
weaker dollar tends to support gold, which is priced in the U.S.
"It's really a weakening dollar (supporting gold), because
conditions are better in terms of global growth conditions,
global economic conditions," Deutsche Bank's Brebner said. "In
that environment, what's the real reason for buying gold?"
Brebner said he was bullish on gold in the long term and
predicted an average price of $1,800 an ounce this year but said
prices were likely to be flat or go down in the near term.
Gold demand from India, the world's biggest buyer of
bullion, remained sluggish as a prolonged strike by jewellers to
protest against excise taxes levied in the budget continued into
a third consecutive week, dealers said.
Traders will also be watching U.S. factory orders due at
1400 GMT as well as a key U.S. employment market report due
later in the week for fresh clues on the health of the world's
Among other precious metals, spot silver was down 0.4
percent at $32.84 an ounce, spot platinum was up 0.5
percent at $1,653.24 an ounce, and spot palladium was up
1.3 percent at $658.75 an ounce.
(Reporting by Michelle Martin; Editing by Jane Baird and Alison