* Dollar retreats ahead of Fed verdict on monetary easing
* Gold sales for Dhanteras festival seen up to 20 pct higher
* Coming up: FOMC statement on rates, policy, 1815 GMT
(Updates prices, adds comment)
By Jan Harvey
LONDON, Nov 3 (Reuters) - Gold prices fell nearly 1 percent
in Europe on Wednesday as the dollar firmed against a currency
basket, with traders nervous ahead of an announcement on
monetary policy from the Federal Reserve later in the session.
Spot gold <XAU=> slipped to a low of $1,344.50 an ounce and
was bid at $1,346.70 an ounce at 1459 GMT, against $1,357.00
late in New York on Tuesday. U.S. gold futures for December
delivery <GCZ0> eased $9.80 an ounce to $1,347.10.
A Reuters poll found on Wednesday that most leading
economists expect the Fed to buy between $80 billion and $100
billion worth of assets per month under a new programme to
bolster the struggling economy. []
Estimates for how long the Fed will print money and how much
it will spend overall varied from $250 billion to $2 trillion.
"My sense is they will still be opening up the doors for QE
into next year," said Deutsche Bank analyst Michael Lewis. "Our
view is whatever happens, it will still be bullish for gold and
commodities more generally."
The dollar, typically a key driver of gold prices, firmed
against a basket of currencies on Wednesday, extending gains
versus the euro and yen after a report showed the U.S. services
sector expanded more than expected in October. []
The dollar has come under pressure in recent sessions,
however, ahead of expected fresh Fed stimulus, which analysts
say could weigh on U.S. yields and ultimately put more pressure
on the unit.
Macquarie analyst Hayden Atkins said the initial euphoria
over QE and its potential impact on gold had largely worn off,
and that while the metal may see some support if the policy
meets expectations, a major lift is unlikely.
"There may be some upside surprise but (markets) pretty
quickly priced out a Big Bang policy," he added. "It might be a
mild positive, but I think the reality of what could happen is
in most people's minds already."
FOCUS CHANGE
"It is good to actually get this out of the way, so we can
start to focus on other global events that mean more to
different markets," he added.
"There has been a lot of talk about what has to happen with
exchange rates globally, but that has probably been ignored
because of the big moves in currency markets on QE expectations.
Maybe we will start to focus more broadly now, and that will
drive the market going forward."
Elsewhere wholesale physical gold demand in the world's
biggest bullion consumer India was healthy as the country's
busiest gold-buying festival, Dhanteras, got under way, with
local demand helped by the strong rupee. []
Traders and retailers expect volume to rise up to 20 percent
despite near-record prices as customers line up to make the most
of the auspicious festival. []
Holdings of the world's largest gold-backed exchange-traded
fund, New York's SPDR Gold Trust <GLD>, slipped on Tuesday,
however, by around 1 tonne to 1,292.189 tonnes. ETFs issue
securities backed by physical stocks of metal. []
On the supply side of the market, the Xinhua news agency
reported that China had found a 100-tonne gold deposit in Inner
Mongolia, worth about $5.25 billion. China is the world's
biggest gold miner, and its number two consumer. []
Silver <XAG=> also fell to $24.44 an ounce against $24.91,
tracking gold. Holdings of the world's number one silver ETF,
the iShares Silver Trust <SLV> eased further from the record
high they hit last month on Tuesday. []
Platinum <XPT=> was at $1,704.99 an ounce against $1,708.50,
while palladium <XPD=> was at $638.72 against $643.
(Editing by James Jukwey)
