* Gold rises on bargain hunting after Fed's decision
* Euro steady after hitting 2-week high
* Light physical buying supports gold, platinum up 1 pct to
track firm Tokyo futures
(Updates prices, adds activity in physical sector)
By Lewa Pardomuan
SINGAPORE, June 26 (Reuters) - Gold bounced on Thursday as
bargain hunters resurfaced after the U.S. Federal Reserve kept
interest rates unchanged and signalled that a rate rise was not
imminent.
The dollar's fall against the euro after the Fed's rate
decision encouraged some investors to shift their money back
into gold. There was light buying by jewellers in Southeast
Asia but main consumer India was on the sidelines, dealers
said.
Gold <XAU=> rose to $887.45/888.40 an ounce from
$879.60/880.60 an ounce late in New York on Wednesday, when it
dropped to its lowest level in a week, at $873.50, due to
weaker oil prices.
"It seems there's not going to be a rise in interest rates,
so it gives some reasons to buy back. I think that's the main
issue at the moment," said Ellison Chu, senior manager at
Standard Bank London in Hong Kong.
"But it's going to be a rangebound market. $895 will be the
high side and the downside is $875," he said.
The U.S. central bank on Wednesday left the benchmark fed
funds rate unchanged at 2 percent and expressed worries about
the upside risks to inflation. But it also said it expected
price pressures to moderate this year.
The euro was steady at $1.5668 <EUR=>, having risen to a
two-week high after the Fed's statement helped cool some
expectations for a near-term rate increase. []
"There's less uncertainty in the market after the Fed
meeting," said a dealer in Singapore. "Market participants
started to liquidate the dollar and buy euro as they expect the
European Central Bank to be more hawkish.
"With the dollar weakening against the euro, good buying
interest flows back into gold. For today, gold might again
re-test the $900 resistance level," he said.
Gold rose to its highest level in more than a week at
$907.90 on rising oil prices last Thursday before retreating.
It is well below a lifetime high of $1,030.80 an ounce hit in
March.
"I would say there's light buying from Indonesia but
there's also some selling from Vietnam. I don't think prices
are going to move much," said a physical dealer in Singapore.
India was absent with the local market in a seasonal lull
as farmers were busy with sowing the crop during the monsoon
season. Demand is expected to pick up again ahead of the Diwali
Hindu festival of lights in October, said dealers.
Spot platinum <XPT=> rose to $2,030.50/2,050.50 an ounce
from $2,004.50/2,024.50 late in New York. Spot palladium <XPD=>
edged up to $461.50/469.50 an ounce from $460.00/468.00 an
ounce.
Gold futures for August delivery <GCQ8> on the COMEX
division of the New York Mercantile Exchange added $7.1 an
ounce to $889.4.
Silver <XAG=> rose to $16.77/16.83 an ounce from
$16.56/16.62 an ounce.
The new benchmark contract on Tokyo platinum futures on the
Tokyo Commodity Exchange <O#JPL:>, June 2009, was at 6,947 yen
per gram after opening at 6,906 yen.
Precious metals prices at 0457 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 887.45 4.10 +0.46 6.57
Spot Silver 16.77 0.02 +0.12 13.54
Spot Platinum 2030.50 -3.00 -0.15 33.59
Spot Palladium 461.50 -2.50 -0.54 25.41
TOCOM Gold 3111.00 -38.00 -1.21 1.67
20053
TOCOM Platinum 6948.00 -43.00 -0.62 30.14
17901
TOCOM Silver 591.00 -15.70 -2.59 9.24
725
TOCOM Palladium 1650.00 -19.00 -1.14 22.13
1842
Euro/Dollar 1.5674
Dollar/Yen 107.93
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Editing by Clarence Fernandez)
