* Gold off 2-wk high after Fed says to buy $300 bln of debt
* Traders fear move will prompt dollar weakness, inflation
* SPDR gold ETF hits fresh record
(Updates throughout, changes dateline, previous TOKYO)
By Paul Lauener
LONDON, March 19 (Reuters) - Gold eased on Thursday as
buyers backed off after a $60 an ounce surge to a two-week high
in the previous session, with rising equities denting the
precious metal's appeal as a safe haven.
Gold leapt as the dollar plunged on Wednesday after the
Federal Reserve announced it would effectively print money by
buying long-term Treasuries. []
The move damaged the dollar's reputation as a safe store of
value and stoked fears of inflation, sending investors to gold,
which is seen as a haven from risk and an inflation hedge.
Spot gold <XAU=> dipped to $932.90/934.90 an ounce at 1028
GMT from $940.00 late in New York on Wednesday.
"We saw such an unprecedented volatile move yesterday, so
you can only expect profit-taking," VTB Capital analyst Andrey
Kryuchenkov said, adding that the rise in equities following the
Federal Reserve's announcement was also pushing gold down.
The MSCI world index <.MIWD00000PUS> and Europe's
FTSEurofirst 300 <> rose in early trading, tracking Wall
Street's gains on optimism that the Fed's move would revive the
economy.
The dollar regained some lost ground on Thursday after
suffering its biggest daily plunge since 1985 in the previous
session, as the Fed said it would begin its first large-scale
purchases of government debt since the early 1960s.
Gold traditionally moves in the opposite direction to the
dollar, as it is often bought as an alternative investment to
the U.S. currency.
A weaker dollar also makes gold cheaper and therefore more
attractive for holders of other currencies.
Analysts say that after Thursday's profit taking, they
expect gold to remain strong, as the Fed move has damaged the
dollar's reputation as the world's reserve currency.
DOMINO
Richcomm Global Services said in a research note concerns
the Fed move may be followed by similar moves from other central
banks, creating a domino effect of weakening currencies and
sending investors to safer investments such as gold.
Central banks in Britain and Japan have already announced
they would purchase their respective government debt, while the
Swiss National Bank last week said outright it would sell francs
to weaken its currency.
Traders are looking ahead to U.S. weekly jobless claims due
at 1230 GMT and the release of U.S. leading indicators for
February at 1400 GMT for their impact on the wider markets.
A rise in gold-backed exchange-traded funds and investment in
gold production also suggested support for gold.
Holdings of the world's largest gold-backed exchange-traded
fund, the SPDR Gold Trust <GLD> rose to a record 1,084.33 tonnes
by March 18, up 15.28 tonnes or 1.4 percent from the previous
day, the latest figures showed. []
Inflows into ETFs are offsetting weakness in jewellery
demand. Data showed exports of gold jewellery from Italy,
Europe's top manufacturer, fell 8.3 percent last year to 4.38
billion euros. []
India gold demand also ebbed on Thursday as traders said
prices were too high. Demand should pick up in mid-April to May
as the wedding season begins. []
Among other precious metals, spot silver <XAG=> eased to
$12.77/12.84 an ounce from $12.88. Holdings of the world's
biggest silver-backed ETF, the iShares Silver Trust, rose 1.3
percent or 101.18 tonnes on Wednesday. []
Platinum <XPT=> edged down to $1,053.50/1,058.50 an ounce
from $1,057, while palladium <XPD=> softened to $195/203 an
ounce from $197.
(Reporting by Paul Lauener; editing by Keiron Henderson)
