Gold futures closed with modest gains Tuesday after the Federal Reserve said it will for the first time, lend $200 in treasuries in exchange for debt that includes mortgage-backed securities. Silver fell.

The Fed said in a statement in Washington it plans to make up to $200 billion available through weekly auctions in an attempt to ease a global credit crunch. The Fed coordinated the effort with central banks in Europe and Canada, which plan to inject up to $45 billion into their banking systems.

Gold for April delivery gained $4.20 to settle at $976 an ounce on the Comex division on the New York Mercantile Exchange, after earlier rising as high as $987.80. On March 5, the price reached $995.20, the highest ever for a most-active contract.

The precious metal has gained 15 percent this year and rose 31 percent in 2007. On Monday, gold futures fell $2.40 an ounce. Last week, gold posted a decline of 80 cents.

Gold has gained 16 percent this year while silver has rallied 32 percent.

Gold is likely to remain extremely volatile in the short term, James Moore, an analyst at said in a note.

The metal is caught between further profit-taking from investors/speculators, forced to cover margin requirements, and ongoing investment demand given the bullish tone across the commodities spectrum, Moore said.

The dollar index, which measures the U.S. currency against a basket of major currencies, gained 0.4 percent.

Also on Nymex, Silver for May delivery lost 2.2 cents to settle at $19.763 on the Nymex, while May copper shed 9.5 cents to settle at $3.7855 a pound. April platinum rose $13.30 to end at $2,052.40 an ounce and June palladium gained $15.90 to finish at $500.05 an ounce.