* Gold up 0.5 pct to fourth successive record high on Fed
* Fed says ready to act, if needed, to step up inflation (Recasts with Fed meeting, reaction)
By Frank Tang and Chris Kelly
NEW YORK, Sept 21 (Reuters) - Gold prices climbed to a fourth consecutive record high near $1,300 an ounce on Tuesday after the U.S. Federal Reserve inched nearer to fresh measures to spur the U.S. economy and to stoke uncomfortably low inflation.
The prospect of further Fed action to prevent prices from falling renewed buying of bullion as a hedge against both economic uncertainty and inflation, reversing an earlier dip spurred by signs of stability in U.S. housing data. [
]As expected, the U.S. central bank didn't move to extend its quantitative easing policy that has underpinned gold's 17 percent gain this year, and helped it hit five record highs in the past six days, but its renewed attention on the risk of deflation was sufficient to put gold into the black.
"The committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate," the Fed said in a statement.
Spot gold reversed early losses to rise 0.5 percent or $6.30 an ounce to $1285.55 an ounce by 2:36 p.m. EDT (1836 GMT), up from around $1,272 prior to the Fed announcement. It touched a record high of $1,288.50 an ounce.
U.S. gold futures for December delivery <GCZ0> climbed $6.70 to $1,287.50, with total COMEX gold trading volume about a quarter higher than the past 30-day average at around 133,000 lots.
"I think the gold bulls really got what they wanted from this Fed policy statement," said Bill O'Neill, partner at LOGIC Advisors in Upper Saddle River, New Jersey.
"Even though there's no fear of inflation, they actually showed a fear for deflation, which is also bullish for gold as it creates uncertainties. It looks like we are onward and upward to $1,300."
Earlier in the day, gold eased after data showed that groundbreaking for new U.S. homes jumped in August to a four-month high, a bigger than expected rise that hinted at some stability in the housing market after steep declined, briefly diminished safe-haven demand for gold. [
]The possibility of Fed stimulus has kept many traders bullish about gold, which remained sharply below its inflation-adjusted all-time high above $2,200 an ounce. (Graphic: http://link.reuters.com/gup24p)
Any further round of quantitative easing would reflect concern over the outlook for U.S. growth. Interest rates probably would also remain lower longer, which could undermine the U.S. dollar, and ultimately prove inflationary.
A weaker dollar often boosts gold. Although that inverse relation has been shaky this year, the correlation has strengthened in the last five days to a negative 0.5. (Additional reporting by Jan Harvey in London; Editing by Marguerita Choy)