Gold rebounds; market eyes Fed, BOJ meetings

Gold bounced back on Monday, inching closer to last week's 13-month high, ahead of crucial policy meetings at the U.S. Federal Reserve and the Bank of Japan that are likely to provide direction to the yellow metal. Spot gold had risen 0.6 percent to $1,255.30 an ounce by 0643 GMT, while U.S. gold eased 0.2 percent to $1,256.5 an ounce. The main focus is the U.S. Fed's policy meeting on March 15-16, after the central bank lifted rates for the first time in nearly a decade in December.

Investors in the precious metals market are also keeping a watch on the Bank of Japan meet. The BOJ's policy board is set to discuss this week whether to exempt $90 billion in short-term funds from its newly imposed negative interest rate, people familiar with the matter said, after the securities industry warned that investment money would be driven into bank deposits.

"We have two central bank meetings this week as the BOJ commence a two-day meeting today and the FOMC announce their interest rate decision on Wednesday," said MKS Group trader Sam Laughlin.

Support at $1,235 should keep the metal buoyant leading into the Fed announcement, while $1,275-$1,280 will likely cap any moves higher, the trader said.

After rolling out bold measures to boost the euro zone economies, including increased asset-buying and a deeper cut to deposit rates, ECB President Mario Draghi on Thursday signalled there would be no further rate cuts.