* 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)