* Bullion gains support from FOMC meeting
* SPDR holdings unchanged
* Recent dollar weakness supports bullion
(Releads, adds analyst comment)
By Rebekah Curtis
LONDON, Sept 24 (Reuters) - Gold rose on Thursday as the
dollar weakened, while also benefiting from its status as a
hedge against risk as investors sold equities ahead of the Group
of 20 summit talks.
Spot gold stood at $1,014 an ounce by 1155 GMT, from
$1,007.05 quoted late in New York on Wednesday <XAU=>. Prices
remain within sight of last week's 18-month high at $1,023.85
and the March 2008 historic peak at $1,030.80.
"Dollar weakness is part of why we're sat where we are,"
Standard Bank analyst Walter De Wet said. "There's going to be
more dollar weakness as we head towards the end of the year. So
we see more upside in gold in Q4."
The dollar retreated against higher-yielding currencies,
making the dollar-priced metal cheaper for holders of other
currencies.
Investors shifted funds from the U.S. currency after the
Federal Reserve on Wednesday bolstered expectations interest
rates will stay very low for a long time. The Fed upgraded its
assessment of the U.S. economy and held benchmark overnight
lending rates at close to zero percent. []
"On balance, the FOMC rate decision and statement were
gold-friendly," HSBC said in a note.
"In an important aspect for gold, the Fed said that it will
gradually slow the pace of mortgage-backed securities purchases,
and that it is monitoring closely the size and composition of
its balance sheet to adjust credit and liquidity."
But the HSBC note also voiced concern about the FOMC
statement estimating long-term inflation will stay subdued, as a
low inflation climate is historically negative for gold prices.
HEDGE AGAINST RISK
Bullion benefited from risk-aversion ahead of the two-day
G20 summit in Pittsburgh that kicks off on Thursday.
The timing for plans to unwind emergency economic support is
a key issue for investors as the G20 leaders seek ways to
nurture the recovery from the recession and build safeguards
against future catastrophes. []
Some analysts added that gold drew support from resilient
demand in the physical market in Asia.
"Despite the high prices the physical demand seems to be
recovering a bit," said Eugen Weinberg, an analyst at
Commerzbank. "Together with higher investment interest, it's
providing a good picture."
India's gold purchases have picked up as the festive season
gathers pace in the world's largest consumer.
"At the moment we see signs of scarcity in some places,"
Weinberg said of the physical market in Asia. "Normally gold is
not something which is really scarce. It's surprising that some
places need to wait some weeks for their deliveries."
The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, said its holdings stood at 1,101.735
tonnes as of Sept 23, unchanged from the previous business day.
Among other precious metals, silver <XAG=> traded at $16.80
from $16.71, platinum was at $1,319 from $1,318.5 and palladium
was at $295 from $292.
(Editing by Keiron Henderson)
