* Bullion prices steady after three days of record peaks
* SPDR gold ETF holdings rise another 3.65 T
* Coming up: U.S. Federal Reserve policy meeting, 1815 GMT
(Updates prices)
By Jan Harvey
LONDON, Sept 21 (Reuters) - Gold steadied in Europe on
Tuesday as the market consolidated after three days of record
highs, but remained supported by speculation the Federal Reserve
may signal a move towards further stimulus measures after a
policy meeting later in the day.
While few traders expect the Fed to unveil further
quantitative easing measures just yet, the bank is likely to
signal its readiness to take such steps if needed.
Any further round of quantitative easing would reflect
concern over the outlook for U.S. growth, meaning interest rates
are likely to remain longer for lower, and could undermine the
U.S. dollar, and ultimately prove inflationary.
Concerns over inflation and volatility in the currency
markets are likely to fuel fresh buying of gold, analysts said.
"All governments and central banks are now trying to weaken
their corresponding currencies, and in this situation gold,
which is also a kind of currency, is (seen) positively," said
Commerzbank analyst Eugen Weinberg.
Spot gold <XAU=> was bid at $1,279.45 an ounce at 1110 GMT,
against $1,279.25 late in New York on Monday. U.S. gold futures
for December delivery <GCZ0> firmed 20 cents to $1,281.00.
The dollar fell towards a six-week low against a basket of
six major currencies <.DXY> ahead of the meeting, which will
take place in Washington and is due to conclude with an
announcement at 1815 GMT. []
"Though the Fed is expected to keep the current policy
unchanged, market participants are hoping for QE2 later in the
year," said VTB Capital analyst Andrey Kryuchenkov in a note.
"For gold, the market holds strong not least on the
expectation of a prolonged dollar weakness, especially in case
the Fed renews its asset purchase programme and the economy gets
yet another liquidity boost to avert a stagnating recovery."
Dollar weakness usually benefits gold, as it boosts the
metal's appeal as an alternative asset and makes dollar-priced
commodities cheaper for holders of other currencies.
MAJOR GOLD ETF HOLDINGS RISE
Investment demand for the precious metal remained healthy,
with holdings of the world's largest gold-backed exchange-traded
fund, New York's SPDR Gold Trust <GLD>, rising another 3.65
tonnes on Monday to 1,304.472 tonnes. []
Investment demand for gold has risen this year as concerns
over the global economy, the stability of the financial markets
and the outlook for paper currencies boost buying of the metal
as a safe store of value.
World Gold Council country manager Cihan Goksel told a WGC
meeting in Istanbul on Tuesday that global gold demand rose 36
percent in the second quarter to 1,050 tonnes. []
A debate at the Denver Gold Forum on Monday found few
delegates at the industry conference expect gold prices to fall
imminently. []
DundeeWealth Economics economist Martin Murenbeeld forecast
the precious metal will keep rising because of heavy demand from
central banks, the jewellery industry and private investors at a
time when supplies have dwindled.
At the same event, the chief executive officer of South
Africa's third-largest gold miner, Harmony <HARJ.J>, said gold
could reach $1,500 per ounce by the end of 2010. []
Among other precious metals, silver <XAG=> was flat at
$20.73 an ounce, after hitting a 2-1/2 year high of $20.99 on
Friday. Platinum <XPT=> was at $1,620 an ounce against
$1,625.75, and palladium <XPD=> at $530.08 versus $535.40.
Switzerland exported most of its platinum and palladium in
August to Hong Kong, the gateway to China's auto sector, Swiss
data released on Tuesday showed. Russian imports fell to 51 kg
from 1,713 kg in the prior month. []
(Editing by Sue Thomas)
