* Spot gold <XAU=> eases as dollar gains broadly
* Dealers wary of liquidation on COMEX holdings
* Main consumer India buys gold during festive season
(updates prices, adds comment)
By Veronica Brown
LONDON, Sept 23 (Reuters) - Gold fell on Wednesday,
retreating from recent 18-month highs and taking cues from the
dollar, with sentiment also capped by discomfort over the extent
of long positions in futures markets and risk of liquidation.
Spot gold stood at $1,007.05 an ounce by 1440 GMT, down 0.65
percent from $1,013.80 quoted late in New York on Tuesday
<XAU=>. Prices remain within striking distance of last week's
18-month high at $1,023.85 and the March 2008 historic peak at
$1,030.80.
Gold and other markets, including stocks and currencies,
traded cautiously ahead of the U.S. Federal Reserve's rate
decision later in the day, with investors looking to see if the
central bank repeats its intention to keep borrowing costs
exceptionally low for an extended period. []
Any resulting dollar weakness would boost gold's chances of
trying to reach the record levels but as speculators hold record
long positions -- buying to profit from upward price moves -- on
the COMEX gold futures market, current price action is seen
raising the possibility of a brutal bout of selling.
"If you add the ETF holdings to COMEX positioning at record
highs, I think that might be a concern," VM Group analyst
Matthew Turner said.
Last year, bullion lost more than $100 only a few days after
it powered to the record high.
"We continue to view gold and silver prices warily due to
large speculative long positions, although if the dollar remains
weak there will be no correction," UBS metals analyst John Reade
said ina note to clients.
ETF HOLDINGS STRONG
On currency markets, the dollar rose 0.2 percent against a
basket of currencies including the euro at 76.169 <.DXY>. A
stronger dollar makes commodities priced in the U.S. unit less
attractive for non-U.S. investors.
U.S. gold futures for December delivery <GCZ9> lost $5.80 an
ounce to $1,009.60 on the COMEX division of the New York
Mercantile Exchange, having hit an intraday high of $1,020.40.
Silver <XAG=> fell to $16.81 per ounce from $17.10 in New
York on Tuesday.
Platinum <XPT=> eased to $1,322.00 from $1,332.00 while
palladium <XPD=> fell to $294.00 from 300.00.
The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust, said its holdings stood at 1,101.735 tonnes as
of Sept. 22, unchanged from the previous day.
ETF Securities said the amount of metal it holds to back its
gold and ETFS Physical Palladium <PHPD.L> exchange-traded
commodities rose to record highs in the week to Sept. 22.
[]
The physical sector saw buying from main consumer India, but
other consumers were hesitant.
"India continues to buy but I guess other consumers are
quite cautious this time around. I don't think people dare to
cash in right now especially after the market has bounced back
from below $1,000," said a dealer in Singapore.
India's gold purchases have picked up as the festive season
gained steam in the world's largest consumer.
(Additional reporting by Lewa Pardomuan in Singapore)
(Reporting by Veronica Brown; Editing by William Hardy)
