PRECIOUS-Gold slips for third session, Fed policy meeting in focus

Wed Jan 29, 2014 2:25am EST

* Fed expected to cut stimulus by another $10 bln
    * Chinese premiums ease further on upcoming holiday
    * Coming up: FOMC statement at 1900 GMT

 (Updates prices)
    By A. Ananthalakshmi
    SINGAPORE, Jan 29 (Reuters) - Gold extended losses to a
third session on Wednesday as investors turned jittery ahead of
the U.S. Federal Reserve's statement on the outlook for its
bond-buying stimulus. 
    A rebound in stock markets after Turkey raised its key
interest rates, calming fears about emerging markets, also hurt
safe-haven gold. 
    The Fed is widely expected to announce a second cut to its
bond purchases at the end of its two-day policy meeting on
Wednesday, after announcing an initial $10 billion cut in
December.
    "Lots of people are anticipating a $10 billion cut, so if
the Fed doesn't do anything, prices could rally. If they do cut,
I don't think gold will fall a lot as there is good support at
$1,200," said Ronald Leung, chief dealer at Lee Cheong Gold
Dealers in Hong Kong. 
    However, Leung cautioned that any gains would be difficult
to hold with China - the world's largest gold consumer - on
holiday for a week from Friday for the Lunar New Year.
    Spot gold fell 0.07 percent to $1,255.30 an ounce by
0713 GMT. It has lost about 1 percent so far this week.
    The yen, another safe-haven asset, also eased as Asian
markets rallied on hopes that Turkey's huge hike in interest
rates would end the flight from emerging markets and revive risk
appetite generally. 
    
    CHINA PREMIUMS FALL FURTHER
    Chinese buying has slowed this week as traders and consumers
wrap up for the Lunar New Year holiday, which starts on Jan. 31.
Chinese markets will be closed until Feb. 6.
    Buying had been brisk in recent weeks in anticipation of the
new year as gold is believed to bring good fortune and often
gifted.
    Premiums for 99.99 percent purity gold on the
Shanghai Gold Exchange fell to about $5.50 an ounce on Wednesday
from $7 in the previous session. They were as high as $20 in
early January. 
    Trading volumes on the exchange on Wednesday were a little
over 8 tonnes - the lowest since Dec. 31. 
    
    PRICES AT 0713 GMT    
 Metal              Last       Change    Pct chg
                                                  
 Spot gold             1255.3     -0.91      -0.07
 Spot silver            19.62      0.07       0.36
 Spot platinum         1403.8      -1.2      -0.09
 Spot palladium           715      0.75       0.11
 Comex gold            1255.4       4.6       0.37
 Comex silver          19.625     0.122       0.63
 Euro                  1.3664                     
 DXY                   80.611                     
                                                  
 COMEX gold and silver contracts show the most
 active months
 
 (Reporting by A. Ananthalakshmi; Editing by Eric Meijer and
Miral Fahmy)