By A. Ananthalakshmi
SINGAPORE (Reuters) - Gold was trading near its lowest in a week on Wednesday, after sharp overnight losses on speculation about further cuts to U.S. stimulus measures and an improving outlook for the global economy.
Investors are turning away from putting new money into gold as the recovery in the international economy, led by the United States, is boosting stock markets and hurting the metal's appeal as a safe-haven investment.
Gold started 2014 on a positive note but worries over stimulus cuts, which weighed on prices last year, are catching up.
The Federal Reserve holds its next policy meeting on January 28-29 when markets think the U.S. central bank will announce a second cut to its $85 billion monthly bond purchases, which had burnished gold's inflation-hedge appeal.
"We think volatility will increase markedly next week heading into the Fed policy statement," said INTL FCStone analyst Edward Meir.
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Spot gold was little changed at $1,243.10 an ounce by 0334 GMT, after falling nearly 1 percent on Tuesday - its biggest one-day decline this year.
Further hurting bullion, the International Monetary Fund raised its global growth forecast for the first time in nearly two years, saying fading economic headwinds should permit advanced nations to pick up the mantle of growth from emerging markets.
Traders said prices could fall further as Chinese physical purchases were also slowing.
Chinese premiums eased to $11 an ounce on Wednesday from $13 in the previous session. Premiums were higher earlier in the year on strong demand for the Lunar New Year holiday.
PLATINUM STRIKES
Platinum was trading 0.4 percent higher at $1,453.75, close to its near three-month peak, as strikes were set to begin from Thursday at the South African mines of top producers.
The move could hit over half of global output of the precious metal and bosses of the world's top three platinum producers accused South Africa's AMCU union of making "unaffordable and unrealistic" demands.
Despite the metal's recent gains, HSBC analysts said the reaction has been subdued.
"A mining strike in South Africa would historically be bullish for the PGMs (platinum group metals) but the muted reaction more recently to the announcement for a possible strike may be due to investor awareness of producer stockpiling ahead of the wage negotiation period last year," the analysts said in a note.
(Reporting by A. Ananthalakshmi; Editing by Ed Davies and Joseph Radford)