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Updated from 12:37 p.m. EST

Gold edged higher Tuesday as dealers took positions ahead of Wednesday’s Federal Reserve interest rate policy announcement.

April-dated bullion contracts added $1.10, to close at $650.10 an ounce on the Comex division of the New York Mercantile Exchange. The PowerShares DB Gold (DGL) fund, which tracks the futures price, was gaining 0.5% recently.

The ETFs that hold the metal — iShares Comex Gold Trust (IAU) and streetTracks Gold Shares (GLD) — also were moving ahead, up 0.4% and 0.3% respectively.

In addition to the added speculative positions, at least part of the story involved transactions by currency dealers.

“I’ve seen evidence that some ‘carry trades’ in Asia are being unwound, and that’s having a spillover into the gold market,” says Neal Ryan, director of economic research at New Orleans-based coin dealer Blanchard.

The “carry trade” involves selling short a low-yielding currency, such as the yen, and investing the proceeds in the government securities of a higher-yielding one, like the dollar or euro. The same theory is used for gold carry trades, with unwinds leading speculators to buy back short bullion positions.

One dollar was recently buying 121.635 yen, down from 121.80 yen late Monday, with the modest weakness in the yen perhaps triggering stops placed by carry-traders. The euro was recently worth $1.2959, not much changed from $1.2953 previously.

Turning to the technical analysis perspective, at least one observer sees a setup in the charts for a strong move up.

“A very bullish technical picture has developed,” says Peter Grandich, editor of The Grandich Letter, who notes that gold prices have withstood a stronger-than-expected greenback, as well as falling energy prices.

Crude oil prices, considered a key factor in causing inflation, have declined about 10% since the beginning of the year, while spot gold prices have remained steady. Some investors purchase gold as a hedge against a rising price level, and the robust performance of bullion, despite the likelihood of reduced inflation concerns, looks encouraging for the bulls, Grandich explains.

In the official sector, the European Central Bank announced net sales of 36 million euros of gold and receivables last week, or about 2.3 tons. The transaction reflects selling by one bank in the ECB system and purchases by another, with the latter no doubt encouraging the bulls.

In the precious metals patch, Randgold Resources (GOLD) was gaining more than many, up 1.8% recently, while AngloGold Ashanti (AU) was losing less than 0.1%.

Turning to base metals, benchmark copper contracts bounced 2 cents to close at $2.56 a pound on the Comex following Monday’s 10-cent drop.

Elsewhere, Deutsche Securities downgraded shares of miner Southern Copper (PCU) to hold from buy, but the stock still bounced, up 1% recently.

Friedman Billings Ramsey took Phelps Dodge (PD) down a notch to a market perform rating from outperform. It also trimmed its stock-price target on Freeport McMoRan Copper & Gold (FCX) to $69 a share from $74, but maintained an outperform rating on the shares. Phelps was up 1% recently, while Freeport was adding 2.2%.

As for ferrous metals, U.S. Steel (X) reported better-than-expected fourth-quarter results after the close Monday. The news helped boost the stock, up 4.5% in afternoon action.

This column was originally published on RealMoney on Jan. 30 at 9:09 a.m. EST. It’s being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.

Motorola (MOT) needs Carl Icahn.

I have never seen a company go from aggressive competitor to so-so indifferent player like this, other than what Carly Fiorina did with Hewlett-Packard (HPQ) .

On the other hand, I have seen Icahn stir things up in a positive way, and he should be welcomed, Jerry York-like, to Motorola. (York was helping General Motors (GM) to turn around until he quit in frustration because the company stopped listening to him.)

The cell-phone market, which Motorola used to dominate, hasn’t turned as horrid as the company implies. Sony Ericsson has done quite well. The climb in Nokia’s (NOK) stock is real; that’s from share-take and better phones.

As someone who believes in the Apple (AAPL) iPhone (how the heck did I get in the minority on that issue?!), I think things are only going to get worse for Motorola.

A few months ago, I had Time Warner’s (TWX) Dick Parsons on my show. I asked him what Carl Icahn brought to the party. He was enthusiastic and said that Icahn was a catalyst to bring about change, that he was constructive, had a lot of good ideas.

I bet Icahn does the same thing at Motorola if they let him.

They should welcome him aboard.

Over the long run, what could be more certain than the rising price of oil? Increasing demand, shrinking supply, China, Iran, Russia and OPEC are all familiar stories.

In fact, what would make you feel more secure than having a few thousand barrels of your own in a private backyard reserve? No more shortages, no more price spikes. Wouldn’t that be nice? And for some extra cash, you could sell a barrel or two when things get bad again.

But how practical is that? You can keep gold in a vault or wear it around your neck. But what about oil? Fill your swimming pool? Build a tank? A rail siding with a tank car or two next to your driveway?

You can invest in oil, but it’s hard to get a pure play. Most oil investments involve buying an oil business, such as an oil or oil-service company, or a financial derivative, such as a futures contract. But you want to keep it simple. You want to buy oil.

And you want to do it now, because it’s down sharply from last year’s highs. Admittedly those highs may reflect emotion and overdone commodity speculation, but today’s prices seem just as emotionally low, presenting a one-time opportunity. If you agree, what better way is there to hedge your investments against geopolitical uncertainty and inflation than buying oil?

http://www.thestreet.com/video/personalfinance/10335989.html for the video version of this story from Jennifer Openshaw.

I think I’ve found an answer, but let’s look at the alternatives.

- Fair — Oil stocks: Buying stocks in oil, oil-service or oil-refining companies is the conventional approach, but your oil price bet is only indirect. You’re really betting on the quality of the company — its management, market position, asset and reserve quality, geopolitical risk exposure and regulatory compliance. It’s easy, and you might get a nice dividend while you wait, but you’re taking on a whole set of additional factors and risks.

- Fair — Oil stock funds: Stock mutual funds and ETFs that specialize in oil and oil-service indices are less risky than buying individual stocks, but they are another step removed from a pure play, and you may pay 50 to 150 basis points or more (0.50% to 1.50%) in management fees.

- Good — Oil futures: Oil futures tempted a lot of individual investors — and institutional ones too — as prices ran up last summer. But you have to know what you’re doing. Sure, you can control a lot for a little. In this case you can own 1,000 barrels, or $52,000 worth of crude, with a $4,000 down payment (the rest is margin). But you must be right, and you must be right by a particular date, or you lose it all. I don’t know about you, but it’s hard for me to tell when oil will rise; I just know that it will.

Now for my answer — or answers, actually. Apparently to satisfy the needs of investors like me, some new and more-direct instruments came forward last year to let people buy oil. Well, not oil, really — just the price of oil:

- Better — Oil-linked ETFs: Two new oil trusts, the U.S. Oil Fund (USO) and the iPath Goldman Sachs Crude Oil Tracking Index ETN (OIL) invest in oil futures and futures options, but they “roll” the contracts so that your bet isn’t tied to any particular time period. Your investment is closely, but not exactly, tied to the price of oil. Futures prices will vary by market conditions, including volatility and other supply/demand considerations. And these investments throw off no cash return while costing 65 to 75 basis points (0.65%-0.75%) in management fees.

- Best — Claymore MacroShares: Fund manager Claymore Securities took a clever approach to buying oil without buying oil. It simply set up two baskets of Treasury securities. Two funds, the Claymore MacroShares Oil Up Tradeable Shares (UCR) and the Claymore Macroshares Oil Down Tradeable Shares (DCR) trade side by side each day.

If the price of oil rises, securities are transferred from the Down fund to the Up fund, adjusting the net asset values according to the oil price change. If the price runs to $120 a barrel, the Down fund is depleted, and the funds are terminated and paid out. Meanwhile, the Treasury securities pay a return, which is applied to the rather hefty 1.6% management fee, with the balance paid to you.

Now, I don’t know about you, but I like the Claymore idea a lot. You can learn more at its http://www.claymoremacroshares.com/public/macro/macrohome.aspx. It might be time to put some MacroShares Oil in my own investment back yard.

Updated from 11:33 a.m. EST

Stocks were having an up-and-down session Wednesday as mixed reports on the economy had traders struggling to position themselves ahead of the Federal Reserve’s upcoming musings on inflation.

The Dow Jones Industrial Average recently was gaining 25 points, or 0.2%, to 12,548. The S&P 500 was down fractionally at 1429, and the Nasdaq Composite was off 1 point at 2448.

Earlier, the Commerce Department said the U.S. economy grew at a stronger-than-expected rate during the fourth quarter. Gross domestic product rose 3.5% last quarter, up from a 2% annual pace in the third quarter, the government said. Economists had estimated the economy grew at a 3% rate.

The year-over-year change in inflation eased to 2.1% from 2.2% in the third quarter, but still remained a bit outside the Fed’s comfort zone.

The GDP report is the first of three that will ultimately be released on the fourth quarter.

Meanwhile, the Chicago purchasing managers’ index dropped to a reading of 48.8, below the consensus 52.0 and the lowest reading since April 2003. Though the Chicago PMI specifically discusses manufacturing activity in the Midwest, it’s closely watched for clues about the overall stability of the nation’s factory sector.

Another report from the Commerce Department said that construction spending fell 0.4% in December, whereas no change had been anticipated.

With all the data as a backdrop, investors were gearing up for the conclusion of a two-day Fed meeting in Washington. The central bank is expected to leave its target fed funds rate unchanged for the fifth straight time at 5.25%.

However, the Fed will also release a statement regarding its views on inflation, which traders will parse for any information about potential future moves.

“It would be tough for the Fed to consider sounding anything but extremely hawkish,” argued Marc Pado, U.S. market strategist with Cantor Fitzgerald. “With the weakness in housing potentially behind us, the Fed will have few excuses for why it isn’t raising rates at this or the next meeting.”

Treasuries were a bit higher. The 10-year note was up 3/32 in price and yielding 4.86%, and the 30-year bond was higher by 8/32 to yield 4.96%.

After a big rally on Tuesday, oil and other energy prices were having a rocky session, but were lately higher. Crude futures were at $57.47, up 50 cents.

The latest inventory report from the Energy Department showed that crude stores increased by 2.7 million barrels last week, distillate supplies rose by 2.6 barrels, and gasoline stocks climbed by 3.8 million barrels.

On the corporate side, Bristol-Myers Squibb (BMY) has hired investment bankers, a possible signal that it is exploring a merger, according to a published report. The Financial Times had the news, following its own article earlier this week that the company was mulling a deal with Sanofi-Aventis (SNY) .

Altria (MO) , the New York-based maker of Marlboro cigarettes, said it will spin off its 89% stake in Kraft (KFT) . The company will distribute 0.7 Kraft shares for every Altria share March 30.

Elsewhere, Time Warner (TWX) said its fourth-quarter earnings rose 34% to $1.75 billion, while sales climbed 8.2% year over year to $12.5 billion. Time Warner was off 15 cents, or 0.7%, to $21.89.

Fellow Dow component Boeing (BA) posted adjusted fourth-quarter earnings of $1.16 a share on revenue of $17.54 billion, exceeding Wall Street’s expectations. Shares were rallying $3.85, or 4.5%, to $89.85.

At Eli Lilly (LLY) , sales for the fourth quarter increased 9% to $4.25 billion, but earnings slumped to $132.3 million from $700.6 million a year earlier. Excluding charges, the drugmaker’s profits would have been $929.6 million, up 7%. On a per-share basis, adjusted earnings were 85 cents. Lilly was higher by 63 cents, or 1.2%, to $53.36.

Eastman Kodak (EK) swung to a fourth-quarter profit of $16 million, or 6 cents a share, from a year-earlier loss of $46 million, or 16 cents a share. Excluding items, the company earned 59 cents a share, beating the average estimate, even as revenue slipped 9% and missed targets. The stock was adding 26 cents, or 1%, to $25.78.

Equities were mostly lower overseas. London’s FTSE was losing 0.6% to 6203, and Frankfurt’s Xetra DAX was tacking on 0.1% at 6789. Tokyo’s Nikkei sank 0.6% overnight to 17,383, and Hong Kong’s Hang Seng dropped 1.7% to 20,106.

Following the closing bell, Internet search giant Google (GOOG) is expected to post fourth-quarter earnings of $2.92 a share. Homebuilder Pulte Homes (PHM) is projected to report a loss of a penny a share, according to Thomson First Call.

Meanwhile, analysts expect Starbucks (SBUX) to post fiscal first-quarter earnings of 26 cents a share after the market closes.

This column was originally published on RealMoney on Jan. 31 at 8:04 a.m. EST. It’s being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.

The difficulty for the Fed is that a case can be made for anything.

If you listen to the conference calls of UPS (UPS) and 3M (MMM) , both truly representative of the U.S. economy, you need an easing and you need one tomorrow.

Last week, FedEx (FDX) was no different, and the same was true with Tenneco (TEN) and Visteon (VC) .

You want the Fed to come to the rescue of Countrywide (CFC) and every homebuilder. GM (GM) and Ford (F) desperately need an easing. So do Caterpillar (CAT) and Black & Decker (BDK) . Wood-product companies (Plum Creek (PCL) ) and chemical companies have been pretty disastrous.

These companies’ woes barely make the radar screen.

Instead, we focus on robust consumer spending a la Nordstrom (JWN) and Coach (COH) . We look at the good traffic of the rails — mostly imports or raw goods.

We like what we see with Honeywell (HON) and United Technologies (UTX) , even though those are more airplane-cycle stories, with much less to do with the economic cycle controlled by the Fed.

And, of course, we look at the profits of the mineral and steel companies, and we say, wow, bountiful, even though year over year, they aren’t so hot and the latter is still in a glut.

To me, that’s not enough to weigh in favor of a steady policy.

Of course, the macro folks focus on employment, which mocks the weakness and makes the whole idea of a cut seem preposterous.

All in all, though, if you look at the actual reporting companies, you simply cannot take an easing off the table, no matter what the futures say.

For stocks, what does it mean? The uncertainty over rates remains oddly good — no recession or they would take action, no inflation or they would take action.

Just like now they are out of the picture, which means there’s plenty of opportunity if you drown out the Fed noise.