* Euro hits session highs vs dollar, risk appetite increases
* Traders await Fed announcement
* Gold demand in India abates as prices tick back up
(Updates prices, adds detail of U.S. data)
By Jan Harvey
LONDON, Dec 16 (Reuters) - Gold rose towards $1,140 an ounce
on Wednesday as the euro hit session highs against the dollar
after risk appetite sharpened, with traders keenly awaiting a
Federal Reserve monetary policy statement due later in the day.
Spot gold <XAU=> was bid at $1,138.50 an ounce at 1509 GMT,
against $1,124.40 late in New York on Tuesday. U.S. gold futures
for February delivery <GCG0> on the COMEX division of the New
York Mercantile Exchange rose $16.60 to $1,139.60 an ounce.
The metal is being supported by dollar weakness, with the
euro extending gains against the U.S. currency as risk appetite
increased with a rise in stocks and commodities. []
"Going into year-end, with relatively thin trading in both
the currency and the gold markets... gold is likely to be driven
in large by the currency moves," said Daniel Major, an analyst
at RBS Global Banking & Markets.
"After the FOMC, if you get a big move in the dollar in one
direction or the other, it is likely to be the main driver of
the gold price."
A softer dollar versus the euro boosts gold's appeal as an
alternative asset and makes dollar-priced commodities cheaper
for holders of other currencies.
Investors are awaiting the Fed policy statement at 1915 GMT
for clues on when it may begin winding down its loose monetary
policy. []
"The market will be looking out for any indications of an
earlier liquidity withdrawal or interest rate rises given recent
bullish U.S. data," VTB Capital analyst Andrey Kryuchenkov said
in a note.
"Perhaps it is too early to turn completely bullish on the
greenback, but sentiment is certainly improving."
SPECULATORS SUPPORT
Speculative investors attracted to what they perceive to be
the metal's good value after a $100 price retreat from record
levels over the last two weeks are also providing key support
for gold prices on the downside, traders said.
"From a technical point of view there is strong support only
at $1,095 and I wouldn't be surprised if the metal at some stage
actually tests that," said Wolfgang Wrzesniok-Rossbach, head of
sales at precious metals house Heraeus.
"But on the other hand, it seems every time it comes below
$1,120, we find speculative buying."
Among other commodities, oil prices rose above $71 a barrel
after snapping a nine-day losing streak a day earlier. Gold
tends to track crude prices, as the metal can be bought as a
hedge against oil-led inflation. []
On the physical side of the market, India's gold demand
turned weak on Wednesday afternoon as traders sought lower
prices, after the offtake picked up slightly late in the
previous session, dealers said. []
Holdings of the SPDR Gold Trust <GLD>, the world's largest
gold-backed exchange-traded fund, were unchanged on Tuesday from
the previous session, it said. []
Among other precious metals, silver <XAG=> was at $17.64 an
ounce versus $17.41, platinum <XPT=> was at $1,457.50 an ounce
versus $1,445.50 and palladium <XPD=> at $372.50 versus $363.80.
(Reporting by Jan Harvey; Editing by Anthony Barker)
