Updated from 11:40 a.m. ET with settlement prices

NEW YORK (TheStreet) -- Gold prices closed higher Monday as investors await direction from the Federal Reserve, which is expected to make a policy statement on Wednesday following the conclusion of a two-day meeting.

Gold for February delivery at the COMEX division of the New York Mercantile Exchange added $9.80 to settle at $1,244.40 an ounce. The gold price traded as high as $1,251.70 and as low as $1,227.20 an ounce, while the spot price was gaining $5.55, or 0.45%.

The Fed convenes Tuesday for a two-day meeting that culminates Wednesday afternoon in a policy statement, quarterly economic projections and a press conference by Chairman Ben Bernanke.

"You want to get kind of small into these types of events," Phil Streible, senior commodities broker at RJO Futures, said in an interview. "On the last three of four different Fed meetings -- we've seen these $30, $40, $50 movements, and if you're on the wrong side of them it could be quite dangerous."

The press conference will be Bernanke's last as he steps down from the top Fed post in January, likely to clear the way for current Vice-Chair Janet Yellen.

What investors are looking for is whether the central bank will announce the decision to scale back its economic stimulus program. While many banks and economists forecast so-called tapering won't occur until March, others have suggested that the raft of better-than-expected economic reports -- manufacturing activity, industrial production, jobs -- during the past few weeks will encourage a Fed pullback this month.

Tapering of monetary stimulus would be seen by the market as a step away from longer-term inflation, which has been a trigger among investors in recent years to buy gold as a hedge against such an event. Simply, the Fed scaling back asset purchases could hurt gold prices, while Barclays said Monday in a research note to clients that no action may cause a short-covering rally to gold prices.

"[T]here is scope for a short-covering rally. Firmer equity markets and golds muted response to a number of catalysts have exacerbated disillusionment among gold investors," Barclays wrote.

Silver prices for March delivery tacked on 50 cents to close at $20.10 an ounce, while the U.S. dollar index was slipping 0.12% to $80.08 -- another factor likely adding to gold's slight push higher.

Gold mining stocks were mostly higher on Monday, in line with the gain in futures. AngloGold Ashanti (AU) added 2.4% to $12.08 a share, while shares of Barrick Gold (ABX) lifted 1.9% to $17.05.

Gold ETF SPDR Gold Trust (GLD) closed up 0.26% to $119.69, while iShares Gold Trust (IAU) increased 0.17% to $12.03.

-- Written by Joe Deaux in New York.

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