TOKYO (MarketWatch) -- Gold futures edged higher Monday afternoon in Asia, bouncing back in electronic trading after a more than 4% drop last week.
Traders gauged investment demand for the metal ahead of this week's U.S. Federal Reserve's monetary policy meeting and a string of U.S. economic data, including figures on industrial production Tuesday and the consumer price index Wednesday.
Gold for February delivery, the most active futures contract for the metal, was $7.20 higher at $1,127.10 on Globex as of Monday afternoon in Tokyo.
The December front-month contract traded at $1,127.20, up $7.80, after ending last week at its lowest closing price since Nov. 13, down 4.2% for the week.
"It's more of a technical buying," said Chintan Karnani, an analyst at Insignia Consultants in New Delhi.
Gold has also strengthened amid "position building" ahead of the meeting of the U.S. Federal Reserve, he said. The monetary policy meeting starts Tuesday in Washington.
Gold traders were also digesting the latest news on the Dubai debt issue. On Monday, Dubai said it received $10 billion in financing from Abu Dhabi, which will pay part of the debt held by conglomerate Dubai World and its property unit Nakheel. See full story on Dubai financing.
Dubai's debt woes had helped to boost the dollar, putting pressure on gold and other commodities.
"We certainly want to see a situation where commodities are being bought on underlying optimism in the strength of the global recovery and not just because they are cheap in [U.S. dollar] terms," said Cameron Peacock, a market analyst at IG Markets, in a note to clients.
"If the [dollar] continues to rise, it will not be long before we see how this plays out," Peacock said.
Myra P. Saefong is MarketWatch's assistant global markets editor, based in Tokyo.
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