* Dollar retreats ahead of Fed meeting; QE prospects eyed
* Coming up: Federal Reserve policy meeting, to Nov. 3
* U.S. Mint says silver sales rise 20 pct to end-October
(Updates prices, adds detail, graphic)
By Jan Harvey
LONDON, Nov 2 (Reuters) - Gold firmed in Europe on Tuesday,
climbing back towards the previous session's near two-week high,
as the dollar retreated ahead of a hotly anticipated policy
meeting of the U.S. Federal Reserve starting later in the day.
At the two-day meet in Washington, the Fed will consider the
prospect of further quantitative easing. Markets are pricing in
a commitment to buy at least $500 billion in Treasury debt over
the coming months to spur a flagging economy. []
Spot gold <XAU=> was bid at $1,354.56 an ounce at 1150 GMT,
against $1,350.25 late in New York on Monday. U.S. gold futures
for December delivery <GCZ0> rose $4.10 an ounce to $1,354.70.
"A further rise in gold seems inevitable given that QE2 is
across the road," said Pradeep Unni, senior analyst at Richcomm
Global Services in Dubai.
"Any further increase in this asset purchase or any
sustained deterioration in the economic status of key economies
led by the United States may result in gold surpassing the
$1,400 mark."
The dollar weakened 0.4 percent against a basket of
currencies <.DXY>, under pressure from uncertainty ahead of the
Fed, while the Australian dollar leapt after Australia's central
bank surprised with a rate hike. []
Gold typically benefits from a softer dollar, which boost's
the precious metal's appeal as an alternative asset.
All eyes are now on the Fed, with the scope and timing of
easing measures set to have a major impact on the financial
markets. Gold has benefited from expectations fresh easing could
pressure the dollar and ultimately prove inflationary.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic showing impact of QE speculation on asset classes:
http://graphics.thomsonreuters.com/F/10/GLB_MKTQEP.html
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
If the Fed's purchase is smaller than $500 billion, the
dollar could stage a relief rally, which would put gold under
pressure, analysts said.
"Should the Fed disappoint markets in terms of the size of
asset purchases, we might see a pullback across the sector,"
said Credit Suisse in a note.
"(But) in our view, a potential correction is likely to be
short-lived and could be used to build fresh positions as the
fundamental backdrop remains supportive."
DHANTERAS, DIWALI APPROACH
Indian gold consumers continued to buy ahead of the key
Dhanteras festival, which celebrates prosperity. It is swiftly
followed by the Diwali festival of light, another key
gold-buying occasion for the world's biggest bullion consumer.
"The footfall is increasing by day," said Ashish Pethe of
Mumbai retailer Waman Hari Pethe Jewellers. "We hope Dhanteras
would be better than last year, but the proportion of bullion
sales to jewellery sales would definitely be higher."
[]
Silver <XAG=> was bid at $24.65 an ounce against $24.60, off
the previous session's 30-year high of $25.03 an ounce.
Data from the U.S. Mint showed its silver bullion coin sales
were up nearly 20 percent in the first 10 months of this year
from a year before, to 28.1 million ounces from 23.4 million.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
FACTBOX on U.S. Mint's gold and silver coin sales:
[]
Graphic on its silver coin sales in 2010 vs 2009:
http://r.reuters.com/vat43q
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
According to Washington-based The Silver Institute, the
Royal Canadian Mint reported that 2010 sales of its Silver Maple
Leaf bullion coin are up 30 percent from 2009 figures to date.
Platinum <XPT=> was at $1,705.99 an ounce against $1,706,
while palladium <XPD=> was at $646.50 against $649.
(Editing by Sue Thomas)
