* Gold mostly flat as dollar unchanged vs euro
* US producer prices fall in February; Oil rallies to $83
* Platinum rises to 2-month high on S.Africa output fears
* Coming up: Consumer Price Index on Thursday
(Recasts, updates comments, closing prices, adds second
dateline, byline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, March 17 (Reuters) - Gold prices
surrendered initial gains to end unchanged on Wednesday, as a
flat dollar and larger-than-expected decline in U.S. producer
prices kept bullion investors on the sidelines.
Earlier in the session, gold rose on follow-through buying
and improved sentiment a day after the Federal Reserve pledged
to keep interest rates low for an extended period.
The metal, used as a safe haven in times of economic
uncertainties, has benefited from currency volatilities related
to sovereign credit fears in Greece and major economies such as
the United Kingdom and the United States.
"The euro has given up gains and failed to push above
$1.38, which is crucial resistance for the market, so gold is
falling back," said VTB Capital analyst Andrey Kryuchenkov.
Spot gold <XAU=> was at $1,123.85 an ounce at 1:48 p.m. EDT
(1748 GMT), against $1,124.70 late in New York on Tuesday.
Bullion had traded as high as $1,132.80 an ounce earlier in the
session.
U.S. April gold futures <GCJ0> settled up $1.70 at
$1,124.20 an ounce on the COMEX division of the NYMEX.
Earlier on Wednesday, a government report showed that U.S.
producer prices fell more than expected in February as energy
costs tumbled, supporting the Fed's resolve to hold rates near
zero. []
The dollar was mostly flat against the euro, as the
currency market took a breather after the report showed that
core producer prices rose by 0.1 percent, in line with
economists' forecast.
The currency market has been particularly volatile of late
because of news related to a possible rescue plan by the
European Union for debt-laden Greece.
"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," said Nick Moore, head of
commodity strategy at RBS Global Banking & Markets.
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.
The Fed's decision is likely to benefit gold in the longer
term, analysts said, as low interest rates reduce the
opportunity cost of holding gold, or the amount it costs
investors to hold non-interest bearing bullion instead of other
assets.
Among other commodities, oil rose sharply for a second
session to $83 a barrel on economic optimism. The Dow Jones
industrial average is on track to post gains for a seventh
straight day on Wednesday. [] []
PLATINUM HITS 2-MTH HIGH
Platinum meanwhile hit a two-month high at $1,641 an ounce
and palladium rose on fears over power output in South Africa,
which is the source of four-fifths of the world's platinum and
the second biggest palladium producer.
South African state-run utility Eskom said on Tuesday 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.
Platinum <XPT=> was at $1,634.50 an ounce versus $1,633.50,
and palladium <XPD=> was at $478.50 versus $470.
Among other precious metals, silver <XAG=> was at $17.49 an
ounce versus $17.40.
Close Change Pct 2009 YTD
Chg Close % Chg
US gold <GCJ0> 1124.20 1.7 0.2 1096.20 2.6
US silver <SIK0> 17.523 0.169 1.0 16.845 4.0
US platinum <PLJ0> 1635.60 4.90 0.3 1471.00 11.2
US palladium <PAM0> 478.85 6.45 1.4 408.85 17.1
Prices at 1:49 p.m. EDT (1749 GMT)
Gold <XAU=> 1123.65 -1.05 -0.1 1096.35 2.5
Silver <XAG=> 17.49 0.09 0.5 16.84 3.9
Platinum <XPT=> 1631.50 -2.00 -0.1 1465.50 11.3
Palladium <XPD=> 476.50 6.500 1.4 405.50 17.5
Gold Fix <XAUFIX=> 1121.75 -9.50 -0.8 1104 1.6
Silver Fix <XAGFIX=> 17.54 30.00 1.7 16.99 3.2
Platinum Fix <XPTFIX=> 1636.00 2.00 0.1 1466 11.6
Palladium Fix<XPDFIX=> 476.00 0.00 0.0 402 18.4
(Reporting by Frank Tang and Jan Harvey; Editing by Lisa
Shumaker)
