* Gold down ahead of Fed's rate decision, hit by firm
stocks
* Nikkei hits 5-week high
* Fed to conclude two-day meeting
* ETF at record above 1,000 tonnes
(Updates prices)
By Lewa Pardomuan
SINGAPORE, March 18 (Reuters) - Gold fell further on
Wednesday as a rally in the stock market prompted investors to
shift some money back to shares, shrugging off a firm euro as
they awaited more clues on the state of the U.S. economy.
The U.S. Federal Reserve, which ends its two-day meeting on
Wednesday, is expected to renew a vow to do whatever it can to
pull the economy out of a painful recession. Investors want to
know if the central bank will announce plans to buy long-dated
Treasuries to keep long-term rates low. []
"It seems that some funds have been shifted from the metal
into equity. That's why gold has been trading lower," said
Peter Tse, a dealer at Scotia Mocatta in Hong Kong.
"I guess it will probably continue for a while as funds
liquidate their long positions in the metal," he said.
Gold <XAU=> was trading at $908.50 an ounce, down $5.70
from New York's notional close on Tuesday, when it slipped 0.7
percent after a surprise surge in U.S. housing starts pushed up
U.S. stocks, giving investors reason to raise their tolerance
of risk.
Bullion has dropped 9 percent since hitting an 11-month
high above $1,000 an ounce in February after investors booked
profits and sales of scraps intensified as holders sold back
jewellery and coins for cash. Gold struck record at $1,030.80
last March.
"We want to see if the economy is improving or not," said
Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong,
explaining why trade was slow in Asia ahead of the Fed's
decision.
"If it is improving, then there will be some pressure on
gold because it's no longer seen as safe haven," he added.
The Nikkei <> booked its highest close in five weeks
on Wednesday as banking shares rose. []
Despite pressure from equity markets, record holdings on
the exchange-traded funds suggested the long-term outlook for
the metal remained bright despite persistent selling at higher
levels, said dealers.
Holdings on the world's largest gold-backed exchange-traded
fund, SPDR Gold Trust <GLD>, were unchanged at 1,069.05 tonnes
on March 17, a record amount first marked the previous day.
[]
"The consumer fabrication demand for gold remains weak. I
suspect that's a negative (factor) for gold. So for gold to
rise, it really needs quite solid investment inflows into it,"
said David Moore, commodities strategist at Commonwealth Bank
of Australia in Sydney.
"I think it's certainly possible for gold to go back to
$1,000. The conditions that pushed the gold price high can
occasionally reoccur. I think the international economic
environment is still troubled."
The euro held near a one-month high on the dollar, aided by
improved investor confidence after surprisingly upbeat U.S. and
German data. []
The Fed, which will announce its rate decision later on
Wednesday, is seen to be unlikely to come up with new measures
and is expected to keep its target for the overnight federal
funds rate steady at zero to 0.25 percent. []
PRICES
Last Change Pct chg Day ago Turnover
pct
Spot Gold 908.50 -5.70 -0.62 3.22
Spot Silver 12.59 -0.11 -0.87 11.22
Spot Platinum 1049.50 6.00 +0.57 12.61
Spot Palladium 194.00 2.50 +1.31 5.15
TOCOM Gold 2892.00 -38.00 -1.30 12.40
30706
TOCOM Platinum 3340.00 -3.00 -0.09 25.94
3928
TOCOM Silver 395.60 -9.80 -2.42 23.90
452
TOCOM Palladium 624.00 -9.00 -1.42 13.45
83
Euro/Dollar 1.3045
Dollar/Yen 98.49
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Additional reporting by Risa Maeda in Tokyo)
(Editing by Ben Tan)
