(changes headline to reflect move after Fed statement)
* India shows strong appetite for physical silver
* FOMC statement boosts gold slightly
* Coming up: Fed chief Bernanke briefing 2:25 p.m. EDT
(Recasts, update with Fed Statement, prices, previous dateline
LONDON)
By David Sheppard
NEW YORK, April 27 (Reuters) - Gold rose by almost 1
percent on Wednesday and silver steadied after a sharp sell-off
in the previous session, with both benefiting from the U.S.
Federal Reserve announcement it would keep interest rates very
low.
Gold prices briefly rose to a session high after the Fed
said it would end its $600 billion bond buying stimulus program
in June while saying it is in no rush to raise
short-terminterest rates it has kept near zero to support the
U.S.
economy.
The announcement after the Fed's two-day meeting was
largely in line with traders expectations, leaving investors
waiting to hear more on the outlook for monetary policy from
chairman Ben Bernanke when he gives the central bank's first
post-decision news conference later in the day.
[]
Spot gold <XAU=> was last up 0.8 percent at $1,513.00 an
ounce by 1:04 EDT (1705 GMT), about 0.7 percent below Monday's
record high at $1,518.10 an ounce. U.S. futures for June
delivery <GCM1> were last up 0.7 percent at $1,513.10.
With the dollar under pressure and its inverse link to
gold strengthening for the first time in a week, the bullion
price was set for a second day of gains, although a string of
public holidays in the United Kingdom restricted volumes.
"We've seen yet again the dollar under pressure ahead of
that statement and precious metals definitely benefiting and
base metals soggy," said Credit Suisse analyst Tom Kendall.
Kendsall said the key drivers for the gold price remained
in place.
"It is the dollar, it is sovereign debt, whether that is
the U.S. or the periphery of Europe. It is headline rates of
inflation in emerging markets and developed markets and it is a
bit of geopolitical uncertainty."
Gold prices have risen to a series of record highs in
recent weeks, while silver hit a 33-year peak on Monday, before
displaying it's characteristic volatility by falling by as much
as 4.9 percent in the next session, its largest one-day fall in
a month.
Still, the white metal is on track for a 21-percent gain
this month and a 47-percent rise this year, making it the top
performing precious metal and commodity of 2011.
"(Silver) is definitely in a period of consolidation and I
think it would be healthy for the market to trade broadly
sideways for at least a few days," said Kendall. "I suspect
maybe we will see the focus come back on gold in the short
term."
Dealers in Asia said strong physical demand was offering
some support to silver, although holdings of silver in the
world's largest exchange-traded funds staged their largest
one-day outflow in nearly two weeks by April 26. []
Spot silver <XAG=> was up 0.5 percent at $45.73 an ounce,
while U.S. silver <SIK1> was last up 1.6 percent at $45.78.
Implied volatility in silver options has been at its
highest this week since November last year as the spot price
has swung from lows around $43 to highs above $49 in the space
of a week.
"The recent sharp increase in volatility is an indication
of the increasing nervousness of market players and could be a
sign that the rally in the silver price is approaching an end,"
said Commerzbank in a note.
Platinum <XPT=> was last up 1 percent at $1,818.48 an
ounce, while palladium <XPD=> was also up 1 percent at
$758.52.
(Additional reporting by Amanda Cooper in London and Rujun
Shen in Singapore; editing by Alden Bentley)
