* 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 stayed firmer on Wednesday
but slipped back below $900 an ounce as stock markets rose on
both sides of the Atlantic, while trading was cautious ahead of
an interest rate announcement from the Federal Reserve later.
The precious metal briefly broke back above $900 after
softer than expected U.S. GDP data, which boosted the appeal of
assets perceived as a safe store of value. However, it failed to
hold those gains as stock markets shrugged off the figures.
Spot gold <XAU=> was bid at $898.05 an ounce at 1508 GMT,
against $891.10 an ounce late in New York on Tuesday.
Immediately after the data it touched a high of $901.60.
U.S. gold futures for June delivery <GCM9> on the COMEX
division of the New York Mercantile Exchange rose $5.10 to
$898.70 an ounce.
Traders are now awaiting the Fed's rate announcement at 1815
GMT, after a two-day policy meeting in Washington. "All eyes
will be on the Fed," said Citi analyst David Thurtell.
Before the Wall Street open U.S. stock index futures pared
gains after data showed gross domestic product fell 6.1 percent,
against expectations for a 4.9 percent drop. [] The
anticipation of weaker share prices gave a lift to gold.
Other assets perceived as less risky, such as Treasuries,
the dollar, also strengthened. While a firmer dollar typically
pressures gold, the relationship between the two has weakened
recently as both react to risk aversion.
However, gold retreated from highs after stocks brushed
aside the numbers to climb at the open amid hopes the Fed
announcement will suggest the recession is bottoming out.
Analysts said 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."
EPIDEMIC
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 lacklustre 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. []
Silver prices, which had also slipped on Tuesday, rose in
line with gold. Spot silver <XAG=> was bid at $12.71 an ounce
against $12.45 late on Tuesday.
Among other precious metals, spot platinum <XPT=> was bid at
$1,090.50 an ounce against $1,087.50, while spot palladium
<XPD=> was bid at $215.50 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 Anthony Barker)
