Gold Steady Ahead of Fed

"There is still a historically large speculative futures position, which presents an overhang," says Kevin Norrish, a commodities analyst at Barclays Capital in London. "We need to get rid of some of the stale long positions and clear the playing field."

In the precious metals patch, Indonesian prosecutors say they are confident that a court will find Newmont Mining(NEM Quote) guilty of polluting a bay with the toxic heavy metals arsenic and mercury, the AP reported this weekend. A verdict is expected in early April and could lead to a prison term for the head of the local operation.

Elsewhere, silver producer Coeur d'Alene Mines(CDE Quote) said a U.S. court canceled the permits associated with a facility at its Alaska-based Kensington gold mine, sending the shares down 4.6% in recent action.

As for base metals, copper prices gained slightly on the Comex, closing up a penny at $3.02 a pound, despite weakness in Shanghai overnight.

Turning to the miners, Bear Stearns upped its rating on shares of Freeport-McMoRan Copper & Gold(FCX Quote) to outperform from peer perform, and pinned a price target of $80 on the stock.

Separately, Freeport announced it had completed its takeover of Phelps Dodge(PD Quote), creating the world's largest publicly traded copper firm.

Freeport shares were recently lifting 2% at about $62, while those of Phelps were ahead 0.7% at $129.