* Gold extends gains after FOMC; oil rallies
* Gold/silver ratio slips to lowest since Jan. 25
* Coming up: Producer Prices on Wednesday, CPI on Thursday
(Recasts, updates closing prices, FOMC decision, changes
byline, dateline, previously LONDON)
By Frank Tang
NEW YORK, March 16 (Reuters) - Gold rose toward $1,130 an
ounce on Tuesday, extending its gain to 2 percent after the
Federal Reserve renewed its pledge to keep interest rates near
zero for an extended period, bolstering the metal's investment
appeal.
Buyers poured into the metal as the dollar fell against the
euro after the Fed kept rates unchanged and reiterated
exceptionally low rates for a while.
The metal, used as a safe haven in times of uncertainties,
has gained due to currency volatilities related to lingering
sovereign debt worries in Greece and major economies such as
the United Kingdom and the United States.
"It's not a case of a weak dollar and strong euro. It's the
fact that currencies in general are not very attractive right
now, and that will remain a major benefit going forward," said
Bill O'Neill, managing director at LOGIC Advisors.
"Gold is assuming the role of currency of choice. Gold's
ability to move independently in the wake of negative currency
moves is a very positive sign."
Spot gold <XAU=> was at $1,126.20 an ounce at 3:06 p.m.
EDT (1906 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 NYMEX settled up $17.10, or 1.6 percent, at
$1,122.50 an ounce.
The Fed's nod to a firmer job market after the deepest
recession in decades offered a hint that it may be moving
closer to dropping its promise to hold borrowing costs at rock
bottom levels. It also had upbeat words on some business
spending. []
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 such as bullion.
Interest rates near zero percent also diminish the appeal
of the U.S. dollar against higher-yielding currencies. []
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.
Concern over the fiscal health of debt-laden Greece and
some major economies has helped support safe-haven flows into
gold this month. The metal continues to benefit from worries
over the sovereign debt.
On Tuesday, Greece escaped the threat of an immediate
downgrade by Standard & Poor's on Tuesday, sending the euro,
U.S. stocks and other assets higher across the board.
OIL RISES TO $82
Among other commodities, U.S. crude oil futures rose about
$2 a barrel as the dollar weakened, and as the Fed kept its
rates steady. []
On the physical market, premiums for gold bars in Asia
jumped to their highest in more than a month as jewelers
restocked and demand from main consumer India started to pick
up ahead of the wedding season, dealers said on Tuesday.
[]
Among other precious metals, silver <XAG=> was at $17.39 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 $1,631.50 an ounce
and was last at $1,627.50 an ounce against $1,620.50, and
palladium <XPD=> was at $469.50 against $461.
Close Change Pct 2009 YTD
Chg Close % Chg
US gold <GCJ0> 1122.50 17.1 1.5 1096.20 2.4
US silver <SIK0> 17.354 0.246 1.4 16.845 3.0
US platinum <PLJ0> 1630.70 14.90 0.9 1471.00 10.9
US palladium <PAM0> 472.40 11.75 2.6 408.85 15.5
Prices at 3:39 p.m. EDT (1939 GMT)
Gold <XAU=> 1126.70 18.60 1.7 1096.35 2.8
Silver <XAG=> 17.39 0.34 2.0 16.84 3.3
Platinum <XPT=> 1630.50 10.00 0.6 1465.50 11.3
Palladium <XPD=> 469.50 8.500 1.8 405.50 15.8
Gold Fix <XAUFIX=> 1124.75 11.50 1.0 1104 1.9
Silver Fix <XAGFIX=> 17.24 22.00 1.3 16.99 1.5
Platinum Fix <XPTFIX=> 1624.00 4.00 0.2 1466 10.8
Palladium Fix<XPDFIX=> 467.00 4.50 1.0 402 16.2
(Additional reporting by Jan Harvey in London; Editing by Lisa
Shumaker)
