* Fed policy meet on June 18-19
* India gold volumes drop, China still strong
* Asian shares recoup losses, dollar index rises
By A. Ananthalakshmi
SINGAPORE, June 17 Gold fell on Monday as Asian
shares reversed early losses and investors waited for a U.S.
Federal Reserve meeting later this week for an outlook on the
central bank's bond buying programme.
The Fed meets on June 18-19 against a backdrop of
stronger-than-expected data on U.S. retail sales and the job
market, with markets looking for clues to any tapering of its
economic stimulus programme.
"The markets are a little bit fatigued at the moment," said
Victor Thianpiriya, commodities analyst at Australia and New
Zealand Banking Group. "They are still looking for direction
from the Fed meeting. That's clearly the big driver this week."
Spot gold fell 0.2 percent to $1,387.61 an ounce by
0650 GMT. Bullion closed up about 0.5 percent for the week on
Friday helped by strong demand for coins and bars, a pullback in
U.S. stocks and rising tensions in the Middle East.
U.S. gold was little changed at $1,387.30, while
Asian shares reversed early losses.
Markets have been volatile since Fed Chairman Ben Bernanke
said last month the bank could scale back its stimulus measures
if the economy improves. A cut in the Fed's $85 billion monthly
bond purchases could hurt gold, which has benefited from its
role as a hedge against inflation.
Thianpiriya said Bernanke was unlikely to deviate from what
he has said before, as it was still too early to determine the
timing of a tapering down of the bond purchases.
Most economists expect the Fed to scale back the size of its
bond purchases by year end, and several expect reduced buying as
early as September, a Reuters poll showed.
Gold prices were supported by some buying in China, the No.
2 bullion consumer in the world after India. Shanghai gold
futures were up 0.2 percent on Monday.
However, demand in Asia has cooled from peak levels seen
after the mid-April sell-off in gold. Bullion is down 17 percent
for the year after 12 years of annual gains.
Indian purchases of gold have fallen since an import duty
hike earlier this month. The government is trying to narrow its
current account deficit by reducing gold imports.
ANZ's Thianpiriya said volumes to India have fallen
significantly in the last two weeks, while those to China were
Hedge funds and money managers slashed their bullish bets in
gold and silver futures and options in the week to June 11, a
report by the Commodity Futures Trading Commission showed on
Gold output in Australia, the No. 2 producer behind China,
fell 5 percent in the first quarter on weather-related
disruption to 63.5 tonnes, according to the latest Gold
Quarterly Review by Surbiton Associates.
Precious metals prices 0650 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1387.61 -2.59 -0.19 -17.13
Spot Silver 21.96 -0.08 -0.36 -27.48
Spot Platinum 1447.99 2.99 +0.21 -5.67
Spot Palladium 728.97 -0.53 -0.07 5.34
COMEX GOLD AUG3 1387.30 -0.30 -0.02 -17.22 11970
COMEX SILVER JUL3 --
COMEX gold and silver contracts show the most active months
(Reporting by A. Ananthalakshmi; Editing by Richard Pullin and