* Risk aversion supports investment in gold
* Coming Up: U.S. Federal Reserve interest rate statement
* Gold/silver ratio slips to lowest since Jan. 25
(Updates, adds comment, changes dateline from SINGAPORE)
By Jan Harvey
LONDON, March 16 (Reuters) - Gold rose towards $1,115 an
ounce in Europe on Tuesday, as persistent concern over sovereign
and currency risk fuelled buying of the metal as a safe haven,
but trading was muted ahead of a Federal Reserve policy meeting.
The metal received little direction from the currency
markets, with the dollar broadly unchanged versus the euro ahead
of the meeting. []
Spot gold <XAU=> was bid at $1,113.70 an ounce at 1021 GMT,
against $1,108.10 late in New York on Monday. U.S. gold futures
for April delivery <GCJ0> on the COMEX division of the New York
Mercantile Exchange rose $8.60 to $1,114.00 an ounce.
Saxo Bank senior manager Ole Hansen said gold seemed to be
taking near-term support from a flight to safety.
"The alternative to investment in bonds, given the U.S. TIC
flows yesterday, is supporting the market for now," he said,
referring to data released on Monday that showed foreign
investors were net sellers of U.S. securities in January.
"But with the speculative long building up again, we need to
see a follow-through to the upside soon in order to avoid
disappointment and subsequent long liquidation."
Gold is benefiting from fears over the sovereign debt of
major economies like the U.S., UK, France and Germany, after
rating agency Moody's said on Monday risks to the blue-chip
status of the world's four largest triple-A sovereign debt
issuers had grown. []
All eyes are now on the Fed. Most commentators expect the
bank to leave interest rates at record lows, but its
accompanying statement will be closely watched for clues as to
the timing of a U.S. rate hike.
The Fed is also expected to signal that its purchases of
long-term securities will end as scheduled at the end of March.
"The committee will no doubt continue to discuss possible
exit strategies from the current very loose monetary policy, but
the reaction of the FX markets will depend on the weight given
to these discussions," Credit Agricole said in a note.
Gold usually moves in the opposite direction to the dollar.
Strength in the U.S. unit curbs gold's appeal as an alternative
asset and makes dollar-priced commodities more expensive for
holders of other currencies.
OIL SLIPS
Among other commodities, oil prices slipped below $80 a
barrel, extending the previous session's near 2 percent losses,
as the market awaited the outcome of an OPEC meeting starting on
Wednesday and the Fed decision. []
On the physical market, premiums for gold bars in Asia
jumped to their highest in more than a month as jewellers
restocked and demand from main consumer India started to pick up
ahead of the wedding season, dealers said on Tuesday. []
India's retail gold buying continued on Tuesday as prices
stayed in the vicinity of their recent lows, prompting consumers
to buy for the new year festivals of Gudi Padwa in Maharastra
and Ugadi in Karnataka, traders said. []
Among other precious metals, silver <XAG=> was at $17.25 an
ounce against $17.05, outperforming gold. The gold-silver ratio
dropped to a seven-week low of 64.46 on Tuesday, meaning silver
is increasingly expensive compared to gold.
VTB Capital analyst Andrey Kryuchenkov said in a note that
silver was benefiting both from expectations industrial demand
will pick up as the economy improves, and from investment
interest.
"Non-commercial lengths in COMEX/NYMEX silver futures saw a
sharp increase (in the week to March 9) that also coincided with
a substantial closure of short positions, bringing net
speculative longs to 31.36 percent of total open interest," he
noted.
Platinum <XPT=> was at $1,617.50 an ounce against $1,620.50,
while palladium <XPD=> was at $462 against $461.
(Reporting by Jan Harvey; Editing by Anthony Barker)
