* U.S. GDP data comes in weaker than expected
* Traders await Fed rates announcement
(Updates throughout, adds comment)
By Jan Harvey
LONDON, April 29 (Reuters) - Gold rose above $900 an ounce
in Europe on Wednesday as Wall Street stock futures pared gains
after softer-than-expected U.S. GDP data, which boosted the
appeal of assets perceived as a safe store of value.
Spot gold <XAU=> was bid at $899.15 an ounce at 1306 GMT,
against $891.10 an ounce late in New York on Tuesday.
Immediately after the data it touched a high of $901.60.
Trading remains cautious, however, ahead of an announcement
on interest rates from the Federal Reserve later in the session.
"All eyes will be on the Fed," said Citi analyst David Thurtell.
Gold took support earlier in the session from dollar
weakness and dip buying after the previous day's losses.
However, a softening of equity markets in the wake of the GDP
data has allowed the precious metal to extend gains.
U.S. stock index futures pared gains after the numbers,
which showed U.S. gross domestic product fell 6.1 percent,
against expectations for a 4.9 percent drop. []
Assets perceived as less risky, such as treasuries, the
dollar and gold, all strengthened. While a firmer dollar
typically pressures gold, the relationship between the two has
weakened recently as both react to risk aversion.
On the wider markets, traders remain cautious over the
prospect of a global flu epidemic, which knocked commodities
lower early in the week, leading to a dip in gold. []
Appetite for gold from investors in physically backed
exchange-traded funds is still cautious after rising sharply
early in the year. Holdings of the largest gold-backed ETF
remained unchanged for a third session on Tuesday. []
Meanwhile, Indian gold buyers continued to trickle in ahead
of the wedding season, with a dip in prices encouraging
purchases. Gold prices in rupees are expected to ease further in
the summer but rise by year-end. []
POLICY
Gold traders are now awaiting the completion of the Federal
Open Market Committee's two-day meeting on interest rate policy
later. The Fed is due to make a rates announcement at 1815 GMT.
The bank is likely to keep rates near zero but hold off new
measures to flood the economy with money as signs emerge that
the deep U.S. economic slowdown may be easing. []
"Gold buyers are likely to be long ahead of the FOMC meeting
this afternoon, rather than short," said Standard Bank analyst
Walter de Wet.
"However, given the fall in the gold price yesterday, it
does increase the possibility of another sharp move down if the
FOMC comes out much more positive than everybody is expecting."
Silver prices, which also slipped on Tuesday, rose in line
with gold. Spot silver <XAG=> was bid at $12.63 an ounce against
$12.45 late on Tuesday.
Among other precious metals, spot platinum <XPT=> was bid at
$1,086 an ounce against $1,087.50, while spot palladium <XPD=>
was bid at $215 an ounce against $213.
Both metals, which are chiefly used in autocatalysts,
tumbled significantly on Tuesday after General Motors announced
restructuring plans, with falling gold prices adding pressure.
According to a study of past price movements, the technical
outlook for both metals is now negative, Commerzbank analysts
said in a note.
However, London-based ETF Securities said it saw a small
inflow into its platinum ETF <PHPT.L> on Tuesday. The fund's
holdings rose just over 3,500 ounces or 1 percent.
(Editing by Peter Blackburn)
