* Equities recover after initial selling
* SPDR gold ETF holdings hit record 1,313.135 T
* Coming up: U.S. Fed interest rates announcement, 1815 GMT
(Updates prices, adds comment)
By Jan Harvey
LONDON, June 23 (Reuters) - Gold slipped below $1,240 an
ounce on Wednesday as stock markets turned positive ahead of an
interest rates announcement from the U.S. Federal Reserve,
curbing buying of the precious metal as a haven from risk.
Prices retreated from session highs at $1,246.10 an ounce as
equities pared losses in Europe and headed for a higher open in
the United States.
Spot gold <XAU=> was bid at $1,239.25 an ounce at 1304 GMT,
against $1,239.00 late in New York on Tuesday. U.S. gold futures
for August delivery <GCQ0> were flat at $1,240.80.
"With U.S. Fed minutes due today, gold is witnessing a
rangebound trading session, and this trend might continue as
long gold is held below the key resistance of $1,245-1,247,"
said Pradeep Unni, senior analyst at Richcomm Global Services.
"It is likely the Fed chairman may sound less authoritative
with respect to growth in the U.S. economy given the weak
housing sales and poor job growth witnessed lately."
European shares reduced losses in early afternoon trade,
while Wall Street stocks headed for a higher opening as the Fed
was expected to hold rates at 1815 GMT and reassure investors it
would not move too soon on its tightening policy. []
"The accompanying statement by the U.S. central bank is
eagerly awaited," said Commerzbank in a note. "Should interest
rates be kept at a low level long term, the U.S. dollar could
come under pressure and this could generally support gold."
Gold also benefits from persistently low interest rates,
because they keep down the opportunity cost of holding
non-interest bearing assets such as bullion.
On the currency markets, the euro firmed against the dollar,
while the U.S. currency dipped 0.1 percent against a basket of
six other currencies. []
Weakness in the dollar typically lifts gold's appeal as an
alternative asset and makes dollar-priced commodities cheaper
for holders of other currencies.
DOLLAR SOFT
The inverse relationship between the dollar and gold is
being reestablished after weakening earlier in the year when
both assets benefited from risk aversion.
"We are entering into the low liquidity time of year and
markets will be looking for any kind of direction," said Saxo
Bank senior manager Ole Hansen.
"This will probably play into the hands of the old
relationship as a lack of other news may entice day traders to
focus on the dollar relationship."
Investment in gold ETFs climbed on Tuesday, with the SPDR
gold ETF noting a five tonne rise in its holdings to record
highs, while ETF Securities said holdings of the gold
exchange-traded commodities it operates from London rose by
22,600 ounces.
In a note, Erste Bank forecast significant further upside
for gold on the back of its appeal as a haven from risk and as
protection from future inflation and currency market volatility.
It said gold could reach $2,300 an ounce in the long term.
"In periods where black swans are no singular occurrences
but are practically coming in flocks, the status of gold as a
safe haven has yet again proven its worth," the bank said.
"Gold has always been a seismograph for the health of the
financial and monetary system, as well as inflation. Although
the focus is currently on the euro zone, the turbulence should
not distract from the problems in the U.S. and Great Britain."
Among other precious metals, silver was flat at $18.74,
platinum <XPT=> was at $1,572 an ounce versus $1,582.50, and
palladium <XPD=> at $483 against $481.50.
(Reporting by Jan Harvey; Editing by Jane Baird)
