PRECIOUS-Gold steadies at $950/oz, FOMC eyed, ETF dips

* Gold may be supported by rising risk tolerance after FOMC

* SPDR Gold holdings XAUEXT-NYS-TT fall by 3.06 tonnes

By Risa Maeda

TOKYO, Aug 12 (Reuters) - Gold prices steadied at around
$950 per ounce on Wednesday, propped up by light short-covering
ahead of the Federal Reserve's policy statement due later in the
day at the end of a two-day meeting.

The dollar's firmness after stronger-than-expected U.S. jobs
numbers late last week put weight on bullion. But recently
built-up positions have mostly been squared off, with investors
bracing for the Fed's assessment of the economy.

Spot gold XAU= traded at $946.10 an ounce as of 0549 GMT,
up 0.2 percent from New York's notional close of $944.55.

U.S. gold futures for December delivery GCZ9 gained 0.1
percent to $948.50 an ounce. The futures contract rose 70 cents
to $947.60 on Tuesday on the COMEX division of the New York
Mercantile Exchange.

Bullion has clawed higher since it touched an August low of
$941.50 on Tuesday.

"I think they're squaring positions. That's all. The Fed's
decision is tonight," said Ronald Leung, director of Lee Cheong
Gold Dealers in Hong Kong, referring to small gains in Asian
trading hours.

Fed Chairman Ben Bernanke's accompanying statement after the
end of the meeting is also cautiously awaited.

Expectations are that the central bank will say the U.S.
recession is waning but will likely warn that recovery will be
slow and will dampen any speculation it will soon start to raise
interest rates. [ID:nN10470294]

"If the Fed holds interest rates steady as expected and
confirms that it will not raise interest rates any time soon, the
markets will be reset," said Kaname Gokon, deputy general manager
at Okato Shoji Co in Tokyo.

"That means people may start increasing their exposure to
riskier assets, typically by selling the dollar and the yen. A
sell-off in the dollar would prop up gold," he said.

A weaker dollar is supportive because it makes commodities
priced in the currency less expensive for non-U.S. investors. It
also increases the allure of gold as an alternative asset.

But gains in gold may be limited as short-term investors are
lured to equities, which enjoy higher liquidity than the precious
metal.

"There isn't enough liquidity in the gold market because
investors are on the sidelines. They want to buy stocks, instead
of gold, for the time being," said Leung, adding that few buyers
were willing to chase gold higher to $960 or $970.

Underlining such views, investors continued to cash in
gold-backed exchange traded funds.

The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust (GLD), said its holdings fell 3.06 tonnes to
1,065.49 tonnes on Tuesday for a third consecutive business day.
They have fallen more than 68 tonnes from record levels since
June 1. [GOL/SPDR]
Precious metals prices at 0549 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 946.05 1.50 +0.16 7.49
Spot Silver 14.29 0.02 +0.14 26.24
Spot Platinum 1234.00 -3.00 -0.24 32.40
Spot Palladium 272.00 1.00 +0.37 47.43
TOCOM Gold 2915.00 -47.00 -1.59 13.29 28395
TOCOM Platinum 3794.00 -98.00 -2.52 43.06 11733
TOCOM Silver 440.00 -9.50 -2.11 37.80 180
TOCOM Palladium 846.00 -15.00 -1.74 53.82 250
Euro/Dollar 1.4145
Dollar/Yen 95.53
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Additional reporting by Chikako Mogi; Editing by Michael
Watson)