* Gold stays strong after expected language in FOMC
* Fed to keep rates low for extended period
* Largest gold ETF reports 3-tonne outflow
(Recasts, updates with quotes, closing prices, changes
dateline, previous LONDON)
By Frank Tang
NEW YORK, Aug 12 (Reuters) - Gold futures remained higher
on Wednesday after the U.S. Federal Reserve signaled the
central bank's strong resolve to keep interest rates at near
zero, which should bolster bullion's status as a hedge against
inflation.
"The Committee ... continues to anticipate that economic
conditions are likely to warrant exceptionally low levels of
the federal funds rate for an extended period," the Federal
Open Market Committee said at the end of its two-day monetary
policy meeting on Wednesday.
The Fed said it would maintain the target federal funds
rate at zero to 0.25 percent.
"This is a totally neutral statement for gold, but it does
show that the Fed is not going to change its interest rate
policy and start pulling in the reins," said Bill O'Neill,
managing partner of New Jersey-based LOGIC Advisors.
"So, the longer that goes on, the longer you could have
long-term inflation."
Heightened deflation worries had sent the price of gold
down toward $900 an ounce earlier this year. However, the metal
has recently held firm on signs that one of the worst economic
crises since the Great Depression has neared its end.
Prior to the Fed statement, December gold <GCZ9> settled up
$4.90 at $952.50 an ounce on the COMEX division of the New York
Mercantile Exchange. It was still up $3 at $950.60 at 3 p.m.
EDT (1900 GMT).
Spot gold <XAU=> was at $948.35 an ounce, against $944.55
an ounce late in New York on Tuesday.
INVESTMENT DEMAND SOFTENS
However, investment demand for physical gold remains soft,
with the world's largest bullion-backed exchange-traded fund,
the SPDR Gold Trust <GLD>, reporting a new outflow. Its
holdings have fallen more than seven tonnes in the past week.
[]
"With more investor redemptions expected after a further
three tonnes of gold was cut from the SPDR ETF yesterday, gold
will remain at risk to further pressure," said
TheBullionDesk.com analyst James Moore.
But gold buying is picking up in the world's largest
bullion consumer, India, as jewelers take advantage of a price
decline to stock up during its festival season.
India celebrates the festivals of Raksha Bandhan,
Janmasthami and Ganesh Chaturthi in August. []
ETF Securities Ltd, an operator of commodity
exchange-traded funds, said it will launch five ETFs backed by
precious metals on the Tokyo Stock Exchange on Aug. 24.
[]
Close Change Pct 2008 YTD
Chg Close Pct Chg
US gold <GCZ9> 952.50 4.90 0.5 884.30 7.7
US silver <SIU9> 14.585 0.240 1.7 11.295 29.1
US platinum <PLV9> 1244.40 -0.70 -0.1 941.50 32.2
US palladium <PAU9> 273.35 -1.80 -0.7 188.70 44.9
Prices at 3:01 p.m. EDT (1901 GMT)
Gold <XAU=> 948.55 4.00 0.4 878.200 8.0
Silver <XAG=> 14.55 0.28 2.0 11.30 28.8
Platinum <XPT=> 1234.50 -2.50 -0.2 924.50 33.5
Palladium <XPD=> 269.50 -1.50 -0.6 184.50 46.1
Gold Fix <XAUFIX=> 947.25 4.50 0.5 836.50 13.2
Silver Fix <XAGFIX=> 14.280 -0.075 -0.5 14.760 -3.3
Platinum Fix <XPTFIX=> 1234.00 0.00 0.0 1529.00 -19.3
Palladium Fix <XPDFIX=> 269.00 0.00 0.0 365.00 -26.3
(Additional reporting by Jan Harvey and Martina Fuchs in
London; Editing by Lisa Shumaker)
