* Gold slightly lower ahead of FOMC policy meeting
* Platinum/gold ratio declines as yellow metal outperforms
* Coming up: Federal Reserve rates decision due 1815 GMT
(Recasts, updates prices, adds NEW YORK to dateline, second
byline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Aug 10 (Reuters) - Gold prices were
slightly lower on Tuesday as investors stayed on the sidelines
as they waited for a decision from the U.S. Federal Reserve
policy meeting.
The Federal Open Market Committee (FOMC) releases its
decision on interest rates and issues a policy statement at
2:15 p.m. EDT (1815 GMT) after a one-day meeting.
Market watchers are awaiting any signal that would suggest
a reiteration that interest rates will stay low for an extended
period, and quantitative easing, such as reinvesting proceeds
from maturing mortgage bonds back into that market.
"That would be gold supportive. It cuts the opportunity
cost of investing in gold," said Citigroup analyst David
Thurtell, referring to the Fed's quantitative easing.
"More monetary stimulus, more liquidity should be favorable
for gold as well," he added.
Spot gold <XAU=> was at $1,198.10 an ounce at 12:43 p.m.
EDT, against $1,200.00 late in New York on Monday. U.S. gold
futures for December delivery <GCZ0> fell $2.30 an ounce to
$1,200.30.
The metal partially cut early losses on safe-haven buying
after government data showed that U.S. business productivity
fell for the first time in 1-1/2 years in the second quarter
and labor costs hardly rose. []
In earlier trade, gold prices were pressured by a stronger
dollar against the euro, as investors scaled back expectations
the Fed would announce further aggressive easing measures to
prop up a softening U.S. economic recovery. []
Speculation has emerged in recent days that the Fed may
take new measures to extend its quantitative easing program,
such as reinvesting funds to maintain its balance sheet.
[]
Any signs of further quantitative easing are likely to be
negative for the dollar, and positive for gold, analysts said.
HSBC pointed out in a note that while further quantitative
easing was seen to be on the table for the United States, the
euro zone appeared to be backing away from QE, while Japan had
avoided implementing such measures.
"The United States looks like it may increase the money
supply while other central banks do not -- this should weaken
the U.S. dollar," it said.
"If the traditional inverse dollar-gold relationship, which
broke down with the onslaught of sovereign risk crisis, is
reemerging, then this should be positive for gold prices."
INDIAN BUYING
Gold's retreat from last week's three-week highs resulted
in a slight improvement in Asian physical demand.
Traders bought more metal in India, the world's largest
gold consumer, as prices eased below $1,200 an ounce.
[]
Physical gold demand tends to rise in August as jewelers
begin to stockpile inventory ahead of the start of India's
wedding season and the Hindu festival of Dhanteras,
traditionally major gold-buying events.
Among other precious metals, silver <XAG=> was at $18.21 an
ounce versus $18.29, platinum <XPT=> was at $1,531 an ounce
versus $1,540 and palladium <XPD=> was at $468 versus $475.
The platinum-gold ratio -- a measure of how many ounces of
gold are needed to buy an ounce of platinum -- eased to a 2-1/2
week low of 1.28, showing gold was becoming increasingly
expensive compared to platinum.
(Graphic: http://link.reuters.com/wek34n)
Prices at 1:11 p.m. EDT (1711 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCZ0> 1198.70 -3.90 -0.3% 9.4%
US silver <SIU0> 18.215 -0.027 -0.2% 8.1%
US platinum <PLV0> 1538.40 -4.50 -0.3% 4.6%
US palladium <PAU0> 472.25 -7.40 -1.5% 15.5%
Gold <XAU=> 1196.40 -3.55 -0.3% 9.1%
Silver <XAG=> 18.20 -0.09 -0.5% 8.1%
Platinum <XPT=> 1532.00 -8.00 -0.5% 4.5%
Palladium <XPD=> 470.00 -5.00 -1.1% 15.9%
Gold Fix <XAUFIX=> 1192.50 -4.25 -0.4% 8.0%
Silver Fix <XAGFIX=> 18.09 -39.00 -2.1% 6.5%
Platinum Fix <XPTFIX=> 1539.00 3.00 0.2% 5.0%
Palladium Fix <XPDFIX=> 479.00 3.00 0.6% 19.2%
(Additional reporting/graphic by Jan Harvey and Amanda Cooper
in London; Editing by Sofina Mirza-Reid)
