* Fed's assurance interest rates will stay low hits dollar
* Oil prices climb back above $82/bbl
* Platinum rises to 2-month high on S.Africa output fears
* Coming up: U.S. February producer price index, 1230 GMT
(Updates, adds comment, changes dateline from SINGAPORE)
By Jan Harvey
LONDON, March 17 (Reuters) - Gold climbed above $1,130 an
ounce in Europe on Wednesday as the U.S. Federal Reserve's
announcement that it will keep interest rates low for an
"extended period" knocked the dollar.
Spot gold <XAU=> was bid at $1,131.75 an ounce at 1038 GMT,
against $1,124.70 late in New York on Tuesday. U.S. gold futures
for April delivery <GCJ0> on the COMEX division of the New York
Mercantile Exchange rose $9.70 to $1,132.10 an ounce.
The dollar came under pressure after the Fed stuck to its
pledge to keep interest rates at current record lows. []
[]
"As soon as the euro-dollar started moved towards $1.38, we
saw currency factors," said Nick Moore, head of commodity
strategy at RBS Global Banking & Markets.
"Gold's inverse relationship with the dollar is such a
powerful (influence) that most moves in gold on a daily basis
can be explained by currencies."
Low interest rates also lessen the opportunity cost of
holding gold, or the amount it costs investors to hold
non-interest bearing bullion instead of other assets such as
cash on deposit.
"As a non-yielding asset, obviously if interest rates remain
near zero, gold can compete, but as soon as we see indications
of tightening, it will be on the back foot," said Moore.
Equity markets also rose on the back of the Fed, with
European shares climbing to a two-month high and world stocks
<.MIWD00000PUS> firming 0.6 percent. [] []
Among other commodities, oil prices extended the previous
session's near $2 gains to well above $82 a barrel. Gold tends
to track crude prices, as the metal can be bought as a hedge
against oil-led inflation. []
PLATINUM HITS 2-MTH HIGH
On the physical markets, Indian gold buying softened in
response to rising dollar prices after strong festival-related
demand took it to one-week highs earlier.
Dealers say spring wedding-related demand is likely to
emerge if prices decline further. "Any corrections to sub-$1,100
an ounce level would be bought as weddings are around the
corner," said a dealer with a state-run bank in Mumbai.
Platinum meanwhile rose to two-month highs and palladium
climbed as concerns over power shortages in South Africa boosted
prices. The republic is the source of four-fifths of the world's
platinum and is the second biggest palladium producer.
South African state-run power utility Eskom said on Tuesday
that power supply is seen as a serious concern from 2011 onwards
until new power stations come onstream. []
The metals, mainly used in autocatalysts, have already risen
strongly this year on expectations for rising car sales.
The world's biggest premium carmaker, BMW <BMWG.DE>, said on
Wednesday that its group vehicle sales will rise by a "solid"
single-digit percent this year. []
The platinum-gold ratio was at 1.44 on Wednesday and earlier
this week matched the 18-month high of 1.46 it hit in January.
Commerzbank said in note that on a historical basis, "the
ratio is not particularly high, implying that platinum still has
potential to catch up".
Platinum <XPT=> was at $1,637.50 an ounce versus $1,633.50,
while palladium <XPD=> at $475 versus $470. Among other precious
metals, silver <XAG=> was at $17.55 an ounce versus $17.40.
(Reporting by Jan Harvey; Editing by Anthony Barker)
