* Gold rises 1.5 pct as dollar hits session low, oil climbs
* Coming Up: U.S. Fed interest rate statement at 1815 GMT
* Gold/silver ratio slips to lowest since Jan. 25
(Releads, updates prices, adds comment)
By Jan Harvey
LONDON, March 16 (Reuters) - Gold jumped above $1,125 an
ounce in Europe on Tuesday as the dollar extended losses versus
the euro and oil rallied above $81 a barrel ahead of a key
Federal Reserve announcement on rates later in the session.
Spot gold <XAU=> hit a high of $1,125.60 an ounce and was
bid at $1,122.25 an ounce at 1349 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 $17.30 to
$1,122.70 an ounce.
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.
"Investors are likely to scrutinize the statements and any
absence of the wording 'rates will stay exceptionally low for an
extended period'," said Pradeep Unni, senior analyst at Richcomm
Global Services.
"If these words are absent, the Fed's intentions would be
clear to the markets and the downward spiral should begin (for)
gold, with momentum picking up beyond $1,100."
Gold is sensitive to suggestions U.S. interest rates may
rise, which could benefit the dollar and raise the opportunity
cost of holding non-interest bearing assets like bullion.
Gold usually moves in the opposite direction to the dollar,
as the unit's strength curbs its appeal as an alternative asset
and makes dollar-priced commodities more expensive for holders
of other currencies.
The dollar hit session lows versus the euro on Tuesday ahead
of the Fed statement. []
Gold has also benefited from fears over the sovereign debt
of major economies, 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. []
"The alternative to investment in bonds, given the U.S. TIC
flows yesterday, is supporting the market for now," Saxo Bank
senior manager Ole Hansen said, indicating data showing foreign
investors were net sellers of U.S. securities in January.
OIL JUMPS ABOVE $81/BBL
Among other commodities, oil prices reversed earlier losses
to jump to a session high at $81.09 a barrel as the market
awaited the outcome of an OPEC meeting starting on Wednesday and
the Fed decision, helping lift gold. []
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 $17.37 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 with gold.
VTB Capital analyst Andrey Kryuchenkov said in a note that
silver was benefiting both from hopes industrial demand will
pick up as the economy improves, and from investment interest.
Platinum group metals benefited from gold's strength, with
platinum <XPT=> hitting a seven-week high at $1,627 an ounce
before easing back to $1,623.50 an ounce against $1,620.50, and
palladium <XPD=> was at $464 against $461.
(Reporting by Jan Harvey; Editing by Sue Thomas)
