* Gold edges down as dollar turns positive ahead of Fed
* Markets await Bernanke comments for clues on U.S. growth
* Worker killed at AngloGold Ashanti mine in SAfrica
(Updates prices)
By Jan Harvey
LONDON, Aug 11 (Reuters) - Gold eased in Europe on Tuesday,
reversing earlier gains, as the dollar swung towards a session
high versus the euro amid caution ahead of a two-day Federal
Reserve meeting on monetary policy.
Spot gold <XAU=> was bid at $942.45 an ounce at 1406 GMT,
against $944.65 an ounce late in New York on Monday. U.S. gold
futures for December delivery <GCZ9> on the COMEX division of
the New York Mercantile Exchange fell $2.30 to $944.60 an ounce.
Gold is mainly being driven by the currency markets at
present, analysts said, as a stronger dollar makes commodities
priced in the currency more expensive for non-U.S. investors.
"Technically speaking, gold has important support at
$940.50 and $938.50, but it feels like it wants to go a bit
lower," said Afshin Nabavi, head of trading at MKS Finance.
"It looks like it's stuck in a tight range, with the dollar
slightly firmer." []
Traders are watching a two-day monetary policy meeting by
the U.S. Federal Reserve that kicks off on Tuesday. While the
Fed is likely to hold interest rates, Chairman Ben Bernanke's
accompanying statement will be scrutinised for clues on the
direction of the U.S. economy.
Better-than-expected economic data, a recovery in equity
markets and the success of the government's Cash for Clunkers
programme to revitalise car sales are all boosting hopes the
recession may be bottoming out in the United States.
If Bernanke confirms this view, it could lift expectations
interest rates will rise, which may benefit the dollar. The U.S.
unit has previously benefited from economic weakness as it is
seen as a haven, but this trend may be turning, analysts say.
"The dollar's ability to rally amid this improving economic
environment is a major change and shows that the focus of dollar
strength is shifting from risk-aversion to future interest rate
hikes," MF Global said in a note.
BELLWETHER
European shares gave up early gains as banking stocks
declined, while Wall Street opened lower, pressured by financial
stocks and caution ahead of the Fed meeting. []
Oil dipped, meanwhile, reversing earlier gains, as equities
fell and the dollar firmed. Strength in the commodities
bellwether can indicate rising interest in the asset class, and
fuels interest in gold as a hedge against inflation. []
But lacklustre demand for physical gold remains a drag on
prices. Some jewellery buying re-emerged in major gold consumer
India after prices hit a one-week low on Monday, but many orders
were made around $930-$935 an ounce. []
The world's largest gold-backed exchange-traded fund, New
York's SPDR Gold Trust <GLD>, said its holdings declined by
another 11,329 ounces on Monday, and have fallen more than 65
tonnes from record levels since June 1. []
While ETF inflows have slowed in the second and third
quarters after a strong start to the year, investment in futures
on New York's COMEX exchange have risen to balance this out. But
the sustainability of this trend is uncertain, analysts said.
"With fund players having built substantial longs over the
last few weeks and the market lacking strong physical interest
to absorb pockets of selling, gold is likely to remain at risk
to further bouts of liquidation in the near-term," said James
Moore, an analyst at TheBullionDesk.com.
On the supply side, AngloGold Ashanti <ANGJ.J> said it had
closed its Mponeng mine in South Africa after a fatality, and
said it was unclear when the mine would restart. []
Among other precious metals, silver prices eased along with
gold. Silver <XAG=> was at $14.25 an ounce against $14.30, while
platinum <XPT=> was at $1,236.50 an ounce against $1,243.50 and
palladium <XPD=> was at $270, down from $272.
(Additional reporting by Martina Fuchs; Editing by James
Jukwey)
