Gold jumped above $590 an ounce on Thursday, extending the previous day's sharp rise, as gains in other metals and firm oil prices boosted speculative buying.

But the market struggled to get clear direction in the short term, with dealers awaiting the Federal Reserve's rate-setting meeting on June 28-29 and keeping an eye on U.S. equities and currency markets.

"We are seeing signs that people have become more enthusiastic in gold in the last 48 hours," John Reade, precious metals analyst at UBS Investment Bank, said.

Short-term sentiment was positive and prices had an upward bias in the next week, he added.

Spot gold (XAU=) hit a high of $594.80 an ounce, its best level since June 13, before easing to $592.90/$593.60 by 1005 GMT, against $589.20/589.90 late in New York.

Gold, used in jewellery and investment, gained more than 2 percent on Wednesday on fund buying, triggered by a weaker U.S. dollar and stronger crude oil prices.

Oil prices climbed to $71 a barrel on Thursday after a smaller-than-expected rise in U.S. gasoline stocks reignited talk of resilient oil demand in the world's top consumer. Copper gained more than five percent on speculative buying.

Analysts said prices might remain well supported ahead of next week's COMEX option expiries, with large open interest at the $600 strike. But they saw choppy trade ahead as the current correction phase was not yet over.

"The push by investors into commodities has not run its course but the panic to buy has been eliminated. Those who think commodities are a one-way bet have either been on holidays for the past 5-6 weeks, or have an unrealistic view of commodity cycles," Commonwealth Bank of Australia said in a report.

FED MEET

Traders awaited the meeting of the Fed, which is seen raising interest rates by a quarter percentage point to 5.25 percent in its 17th straight rate rise. Investors would look for signs for another hike in August.

Higher U.S. rates support the dollar and may diminish gold's allure as an alternative investment.

"No big bulls will come to the market ahead of the meeting. I am still bullish but I don't want to make any big moves until we clear June," a metals trader in Singapore said.

An official and an economist at the central bank in China wrote in an article that the country should convert some of its foreign exchange reserves, the world's largest, into gold to hedge against the dollar's weakness. [ID:nPEK57217]

"We have heard similar comments on many occasions and we do not believe that this represents a change in policy," UBS said in a report.

In other precious metals, platinum (XPT=) rose to a two-week high of $1,198 an ounce before settling at $1,196/1,202, versus $1,183/1,191 late in the U.S. market.

Palladium (XPD=) rose to $314/320 from $310/315, while silver (XAG=) was up at $10.56/10.66 an ounce from $10.51/10.61.