* Fed's lukewarm economic assessment boosts safe-haven bid
* SPDR gold ETF records biggest ever one-day outflow
* Option investors expect futures to bounce
* Coming up: U.S. initial jobless claims Thursday
(Recasts, adds comments, updates with Fed policy statement,
new byline, dateline, previously LONDON)
By Frank Tang
NEW YORK, Jan 26 (Reuters) - Gold rose on Wednesday,
snapping a four-day losing streak, after the Federal Reserve's
lukewarm economic assessment and its plan to complete its
bond-buying program boosted bullion's safe-haven appeal.
The metal recovered from a three-month low earlier in the
day after news showing a record outflow from the world's
largest gold-backed exchange-traded fund weighed down on
sentiment.
In a statement following its policy-setting meeting, the
Fed said that economy is recovering but not sufficient for a
significant improvement in labor market conditions, and that
justified its $600 billion bond-buying program. []
[]
"There have been a lot of optimism weighing down on the
gold market. To some degree, the Fed statement put some
dampening on the stock rally and brings some buying back into
the metal," said Frank McGhee, head precious metals trader of
Integrated Brokerage Services.
Spot gold <XAU=> rose 0.5 percent to $1,339.92 an ounce by
3 p.m. EST (2000 GMT). U.S. gold futures for February delivery
<GCG1> settled up 70 cents at $1,333 an ounce prior to the
Fed.
Silver <XAG=> gained 2.1 percent at $27.40 an ounce.
The Fed also kept its benchmark rate unchanged near zero,
adding that measures of underlying inflation were "somewhat
low," although it acknowledged rising commodity prices that
have fueled global inflation worries.
McGhee said that the Fed's policy statement was friendly to
gold as it indicated the U.S. central bank is not going to
raise interest rates at its next meeting and possibly beyond.
U.S. COMEX gold futures volume totaled about 250,000 lots,
about 15 above its 30-day average and in line with recent
higher volume this week, preliminary Reuters data showed.
Open interest in U.S. gold rose 7,000 lots on Tuesday, back
above 500,000 lots, after it tumbled more than 10 percent on
Monday due to heavy liquidation combined with contract rollover
ahead of February's first notice day on Jan. 31, traders said.
SPDR GOLD TRUST RECORD OUTFLOW
The SPDR Gold Trust, the world's biggest gold-backed ETF
had its largest one-day outflow on record on Tuesday,
reflecting a decline in investor interest. []
Barclays Capital said outflows from a range of gold ETFs
had brought overall holdings to their lowest in five months.
Traders said that the gold market has been holding
relatively firm in light of the additional bullion back on the
open market from the ETFs.
Gold has lost 6 percent so far in January, which would be
its first monthly decline in six months.
However, investors have stepped up buying call options this
week, after option traders reported an increase in puts buying
as an insurance against further decline in the price of gold
futures. []
Gold could face further technical selling due to a
head-and-shoulder top pattern and key support was near its late
October low at $1,317 an ounce, said Scott Meyers, senior
analyst at Pioneer Futures.
"Since we are at a very crucial trendline support area,
investors are not as willing to take on position," Meyers said.
He added the lower price volatility on Wednesday was indicative
of a market that's not sure what direction it wants to go.
Spot platinum <XPT=> rose 0.9 percent to $1,799.74 an
ounce, while palladium <XPD=> rallied 4 percent to $809.50.
Both are expected to rise this year and next as their
underlying fundamentals tighten. []
Prices at 3:34 p.m. EST (2034 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCG1> 1333.00 0.70 0.1% -6.2%
US silver <SIH1> 27.128 0.323 0.0% -12.3%
US platinum <PLJ1> 1793.80 9.60 0.5% 0.9%
US palladium <PAH1> 804.60 19.85 2.5% 0.2%
Gold <XAU=> 1342.60 9.85 0.7% -5.4%
Silver <XAG=> 27.47 0.63 2.3% -11.0%
Platinum <XPT=> 1800.99 16.49 0.9% 1.9%
Palladium <XPD=> 811.72 33.00 4.2% 1.5%
Gold Fix <XAUFIX=> 1328.00 -7.50 -0.6% -5.8%
Silver Fix <XAGFIX=> 27.10 40.00 1.5% -11.5%
Platinum Fix <XPTFIX=> 1791.00 9.00 0.5% 3.5%
Palladium Fix <XPDFIX=> 790.00 7.00 0.9% -0.1%
(Additional reporting by Amanda Cooper and Jan Harvey in
London; Editing by Lisa Shumaker)
