PRECIOUS-Gold slides 1.5 pct as Fed comments lift dollar

                                
 * Dollar bounces to three-month high after upbeat Fed
* Gold tracks oil, other commodities lower
* ETFS Physical Palladium ETP holdings hit record
                                
 (Updates prices)
                                
 By Jan Harvey
                                
 LONDON, Dec 17 (Reuters) - Gold prices fell 1.5 percent in
Europe on Thursday, pressured by the dollar's surge to
three-month highs after the Federal Reserve voiced optimism
about the U.S. economy.
                                
 Spot gold <XAU=> was bid at $1,119.40 an ounce at 1201 GMT,
against $1,137.80 late in New York on Wednesday. In that session
it climbed as high as $1,141.50.
                                
 "As the markets get further confirmation that the U.S.
economy is gathering strength, the dollar's strength may force
gold to slide lower," Pradeep Unni, a senior analyst at Richcomm
Global Services, said.
                                
 U.S. gold futures for February delivery <GCG0> on the COMEX
division of the New York Mercantile Exchange fell $15.30 to
$1,120.80 an ounce.
                                
 The dollar hit three-month highs on Thursday as investors
wound up short positions for the year, with the Fed's statement
on the economy supporting the unit's recent rebound. [FRX/]
                                
 The Fed voiced growing optimism on Wednesday over the U.S.
economy as job losses slow, but said it would keep interest
rates low for "an extended period". [ID:nN16119711]
                                
 In a post-meeting statement, the Fed highlighted improvement
in the battered housing sector and noted last month's fall in
the unemployment rate.
                                
  "The overall tone was more than sufficient for the
greenback to extend its upward trajectory, especially amid the
rapid concentration of euro zone-centric credit and banking
problems," said CMC Markets chief market strategist Ashraf Laidi
in a note.
                                
  Strength in the U.S. unit reduces gold's appeal as an
alternative asset and makes dollar-priced commodities more
expensive for holders of other currencies.
                                
 
                                
 OIL FALLS
                                
 Many other commodity prices also fell, with oil down more
than 50 cents a barrel as the dollar's rise curbed buying. Gold
tends to track crude prices, as the metal can be bought as a
hedge against oil-led inflation. [O/R]
                                
 On the wider markets, European shares fell and U.S. stock
futures pointed to a lower opening on Wall Street after the Fed
reaffirmed that its special liquidity measures will expire early
next year. [.EU] [.N]
                                
 New York investors showed renewed interest in
exchange-traded funds, with holdings of the world's largest
gold-backed ETF, the SPDR Gold Trust <GLD>, rising nearly 4
tonnes on Wednesday, the trust said. [GOL/SPDR]
                                
 Earlier this month the fund saw its biggest outflow since
July as gold prices slipped.
                                
 In India, the world's biggest bullion consumer last year,
gold prices fell in the physical market as buyers stayed away,
expecting another fall in prices, dealers said. [ID:nSGE5BG0C2]
                                
 Among other precious metals, silver <XAG=> was bid at $17.37
an ounce against $17.67, while platinum <XPT=> was at $1,434.80
an ounce versus $1,451.50. Palladium <XPD=> was bid at $367.10
an ounce against $371.50.
                                
 Investment interest in the metal was strong, with holdings
of ETFS Physical Palladium <PHPD.L>, an exchange-traded product
operated by London's ETF Securities, rising more than 10,000
ounces on Wednesday to a record 658,743 ounces.
 (Editing by Sue Thomas)