Gold gains as Cyprus mulls taxes on bank deposits, eyes Fed meet

Investing.com - Gold prices rose in U.S. trading on Tuesday as uncertainty over a potential tax applied to bank deposits in Cyprus bolstered the metal's safe-haven appeal.

Expectations for the Federal Reserve to keep monetary unchanged also sent the metal making cautious gains.

On the Comex division of the New York Mercantile Exchange, gold futures for April delivery were up 0.43% at USD1,611.50 a troy ounce in U.S. trading on Tuesday, up from a session low of USD1,599.20 and down from a high of USD1,614.60 a troy ounce.

Gold futures were likely to test support USD1,590.80 a troy ounce, Monday's low, and resistance at USD1,619.40, the high from Feb. 26.

Policymakers in Cyprus were scrambling to find ways to raise EUR5.8 billion to comply with European and IMF terms to secure EUR10 billion in bailout financing in ways that did not involve asking bank depositors to take a haircut on their savings to help restore the country to fiscal health at the time of writing on Tuesday.

The Cypriot parliament has yet to cast final votes on the proposal, though talk Finance Minister Michalis Sarris might step down over the matter largely repelled investors away from the euro, which boosted gold's appeal as a safe-haven hedge against weakening paper currencies.

Meanwhile in the U.S., the Federal Reserve began a two-day monetary policy meeting Tuesday, and expectations were widespread for the monetary authority to leave policy unchanged, which also bolstered gold's appeal.

The Fed is currently running a USD85 billion monthly bond-buying program known as quantitative easing to spur recovery, a stimulus tool that keeps the dollar weak as a side effect.

While economic indicators have suggested that the U.S. economy is gaining steam, market sentiment continues to suggest the Fed will not rush to unwind stimulus tools in the near future.

Elsewhere on the Comex, silver for May delivery was down 0.01% at USD28.870 a troy ounce, while copper for May delivery was down 1.00% and trading at USD3.394 a pound.