PRECIOUS-Gold slips after Fed maintains policy, euro rise supports

Wed Mar 20, 2013 4:30pm EDT

* Fed says maintains security purchases, low interest rates
    * Fed extends forecast for first rate hike to 2015 from 2013
    * Euro gains on the dollar after Fed statement
    * SPDR holdings post first inflows since early February
    * Coming up: U.S. weekly jobless claims report 8:30 a.m. EDT

 (Updates prices; adds comment; adds Fed statement, releads;
rewrites throughout; changes dateline, byline)
    By Carole Vaporean
    NEW YORK, March 20 (Reuters) - Gold slipped slightly in
brisk trade on Wednesday after the U.S. Federal Reserve issued
its latest policy statement, repeating its accommodative stance
while extending it another two years, but gains in the euro
provided support for the precious metal. 
    The latest communique said the Federal Reserve would keep to
its plan to stimulate the U.S. economy with large-scale bond
purchases despite data indicating improved growth. But, policy
makers would monitor risks posed by their policies, as well as
their progress in lowering unemployment. 
    While gold prices fell somewhat following the release, they
mostly held within a narrow trading range, underpinned by
strength in the euro currency.
    "To me it looks neutral for gold. It's still a little bit on
the defensive, but there is not a big argument from the (Fed)
statement for gold to drop," said James Steel, chief commodities
analyst at HSBC in New York. 
    Spot gold  as changing hands around $1,606 per ounce
by 3:41 p.m. EDT (1941 GMT), down 0.42 percent. U.S. gold
futures for April delivery were off 0.36 percent at
$1,605.50, after settling $1,607.50 per ounce.
    Gold had eased from the previous session's three-week high,
reflecting some investor optimism that the crisis in Cyprus may
not spread further in the euro zone.
    Cypriot leaders were still scrambling to avert a financial
meltdown after parliament rejected the terms of a European Union
bailout, but markets remained calm as investors waited for an
alternative solution to emerge. 
    Bullion hit a three-week high at $1,615.16 just before the
Cypriot parliament vote on Tuesday, as investors sought refuge
in the safe-haven metal.
    The euro rebounded from a four-month low on the dollar as
immediate fears about a financial meltdown in Cyprus eased, with
the island country pleading for a new loan from Russia.
  
    Following the FOMC meeting, Fed Chairman Ben Bernanke held a
press conference, but gold reacted little to his comments. He
reiterated that the Fed would continue with its asset purchases
until the labor market outlook improves substantially. 
    "When we see that the (labor market) situation has changed
in a meaningful way, we may well adjust the pace of purchases,"
he added. 
    The Fed also said it extended plans to keep key interest
rates low until 2015 from 2013 previously. It slashed benchmark
overnight interest rates effectively to zero in 2008 as it
battled the financial crisis.
 
    Asked whether Bernanke's comments impacted gold prices,
David Lee, a metals trader at Heraeus Precious Metals Management
in New York said, "No, I really don't think so. Everyone's still
digesting what he's saying."
    "You need more data points and I think that's what
Bernanke's saying. But he's not going to give away his hand. So
let's see what happens with tomorrow's weekly job report."
    With the Fed's emphasis on the U.S. employment situation,
Lee said longer term gold buyers will likely wait to see whether
the weekly U.S. jobless claims report on Thursday continues to
show improvement before jumping in to buy the metal. 
    Supportive of gold prices, holdings of SPDR Gold Trust
, the world's largest gold-backed exchange-traded fund,
rose 2.708 tonnes to 1,222.162 tonnes on Tuesday, the first
increase in daily holdings since early February.    
    
    PHYSICAL BUYING LAGS
    The rise in spot gold prices for six of the past seven
sessions has dented demand in Asia's physical markets, where
buying slowed from earlier in the month.
    Buyers are waiting for prices to return to lower levels if
the situation in Cyprus calms down.
    "But in China there may also be some element of pay back, as
typically strong activity in March was brought forward to the
latter half of February amid more attractive prices," said UBS
analyst Joni Teves said in a note.
    Silver eased 0.4 percent to $28.75 an ounce. 
    Spot platinum gained 1.4 percent to $1,574.99 an
ounce, partially recovering from the lowest since Jan. 7 at
$1,545.25 hit on Tuesday after poor European car sales data and
worries about the euro zone economy.
    Spot palladium added 3 percent to $754.97, after
tumbling 3.9 percent in the previous session, the sharpest
one-day decline in nearly five months.   
    
 3:43 PM EDT     LAST/    NET   PCT      LOW    HIGH  CURRENT
                SETTLE   CHNG  CHNG                       VOL
 US Gold APR   1607.50  -3.80  -0.2  1599.60 1613.90  118,247
 US Silver MAY  28.817 -0.026  -0.1   28.400  28.985   24,053
 US Plat APR   1582.50  27.10   1.7  1554.80 1583.00   15,286
 US Pall JUN    758.20  23.00   3.1   734.00  764.50    5,757
                                                              
 Gold          1605.84  -6.95  -0.4  1603.95 1614.60         
 Silver         28.750 -0.120  -0.4   28.650  29.000
 Platinum      1574.99  21.49   1.4  1557.50 1580.50
 Palladium      754.97  21.97   3.0   736.50  761.50
                                                              
 TOTAL MARKET              VOLUME          30-D ATM VOLATILITY
                CURRENT   30D AVG  250D AVG   CURRENT     CHG
 US Gold        150,262             174,963     13.66   -0.10
 US Silver       25,839              52,746     20.92   -1.06
 US Platinum     23,661              10,829     18.03    0.14
 US Palladium     5,958               5,242                  
                                                              
 

 (Additional reporting by Clara Denina; Editing by William
Hardy, Dale Hudson and Marguerita Choy)
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