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 U.S. Federal Reserve's policy statement at the end
of a two-day meeting due later in the day.
                                
 The firmness of the dollar 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 $946.40 an ounce as of 0339 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 $948.80 an ounce. The contract on Tuesday rose 70
cents to $947.60 on the COMEX division of the New York Mercantile
Exchange.
                                
 Gold 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.
                                
 Federal Reserve Chairman Ben Bernanke's accompanying
statement after the end of a two-day policy meeting is also
cautiously awaited.
                                
 Expectations are that the U.S. central bank will admit that
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 is not 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 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, and that they have fallen more than
68 tonnes from record levels since June 1. [GOL/SPDR]
 Precious metals prices at 0337 GMT
 Metal             Last    Change  Pct chg  YTD pct chg  Turnover
 Spot Gold         946.35    1.80   +0.19      7.52
 Spot Silver        14.30    0.03   +0.21     26.33
 Spot Platinum    1240.50    3.50   +0.28     33.10
 Spot Palladium    272.50    1.50   +0.55     47.70
 TOCOM Gold       2918.00  -44.00   -1.49     13.41        22165
 TOCOM Platinum   3807.00  -85.00   -2.18     43.55         8457
 TOCOM Silver      440.00   -9.50   -2.11     37.80          137
 TOCOM Palladium   844.00  -17.00   -1.97     53.45          202
 Euro/Dollar       1.4142
 Dollar/Yen         95.57
 TOCOM prices in yen per gram, except TOCOM silver which is
 priced in yen per 10 grams. Spot prices in $ per ounce.