* India shows strong appetite for physical silver
* Fed Chief Bernanke starts market briefing
* Gold hits new high for eighth time in nine sessions
(Recasts, updates prices, market activity)
By David Sheppard
NEW YORK, April 27 (Reuters) - Gold rose to a record high
above $1,520 an ounce on Wednesday after the Federal Reserve
announcement that it would keep U.S. interest rates very low.
It was the eighth record high in nine trading sessions for
spot gold. The precious metal rose more than 1 percent to touch
$1,523.44 an ounce after the Fed said it would end its $600
billion bond buying stimulus program in June as planned.
The Fed also said it was in no rush to raise short-term
interest rates that have remained near zero to support the U.S.
economy.
James Steel, metals analyst and Senior Vice President at
HSBC in New York said the Fed's post-meeting statement had "put
the nail in the coffin" of the idea that the Fed was preparing
to tighten monetary policy faster than previously thought.
"There will be no speed about reversing policy. Their
accommodative policy has been ascribed in part to concerns
about higher inflation and also have pumped up commodity demand
abroad," Steel said.
"Both of those things are good for gold."
Spot gold <XAU=> was last up 1.3 percent at $1,521.35 an
ounce by 2:20 pm EDT (1705 GMT), easing slightly from the
earlier record. U.S. futures for June delivery <GCM1> were last
up 1.2 percent at $1,521.30, having also touched a record of
$1,524.20 an ounce.
Fed Chairman Ben Bernanke started the central bank's first
post-decision news conference at 2:15 pm EDT, which traders and
analysts were watching for further clues on the outlook for
monetary policy in the world's largest economy.
The Fed Chairman said he expected a relatively weak number
for U.S. GDP in the first quarter, and it would be at least two
more meetings before the Fed considered raising rates.
Credit Suisse analyst Tom Kendall said the weak dollar and
other 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."
Silver hit a 33-year peak on Monday, then tumbled as much
as 4.9 percent in the next session, its largest one-day fall in
a month. It reamains on track for a 21-percent gain this month
and a 47-percent rise this year, which would make 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.
Spot silver <XAG=> was up 3.19 percent at $47.00 an ounce,
while U.S. silver <SIK1> was last up 4.2 percent at $46.93.
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 1.3 percent at $1,822.50 an
ounce, while palladium <XPD=> was up 1.4 percent at $763.25.
(Additional reporting by Amanda Cooper in London and Rujun
Shen in Singapore; editing by Alden Bentley and David
Gregorio)
