* Dollar weakens as investors await direction on QE
* Indian buying picks up as prices fall, dealers say
* Platinum, palladium outperform gold, silver
(Releads, updates prices)
By Jan Harvey
LONDON, Oct 28 (Reuters) - Gold rose back above $1,345 an
ounce on Thursday as rising uncertainty over the scope and
impact of potential U.S. monetary easing to be announced by the
Federal Reserve next week knocked the dollar sharply lower.
Spot gold <XAU=> touched a high of $1,345.50 an ounce and
was bid at $1,341.94 an ounce at 1540 GMT, against $1,324.70
late in New York on Wednesday. U.S. gold futures for December
delivery <GCZ0> rose $20.00 to $1,342.60.
Spot prices quickly retreated after hitting a record high at
$1,387.10 an ounce earlier this month, as concerns that
potential U.S. quantitative easing was too heavily priced into
the financial markets led to a bounce in the dollar.
Support came for gold on Thursday, however, as the dollar
fell 1 percent against the euro and slipped against a currency
basket. All eyes are on the Fed meeting on Nov. 2-3. []
"(Gold) is just tracking the dollar now until next
Wednesday," said Deutsche Bank trader Michael Blumenroth.
"Everything is dependent on the Fed meeting... but in general, I
would think we have seen a large part of the correction.
"In the medium term gold should trade higher because the
fundamentals are strong regardless of what the Fed will do," he
said. "This is a time of the year when physical demand is pretty
good, and at the end of the day we should trade higher again."
A Reuters poll showed Wall Street analysts expected the
Federal Reserve to buy $80-$100 billion worth of assets per
month under a new programme widely expected to be unveiled after
next week's two-day Fed meeting. []
The precious metal is likely to stick to a relatively narrow
range ahead of further information about the size and impact of
any further U.S. monetary easing, analysts said.
INDIAN BUYING PICKS UP
Gold's recent price drop tempted buyers back to the market
in India, the world's biggest bullion consumer. Traders hunted
bargains to meet ongoing festival and wedding demand, aided by a
strong rupee, while scrap sellers in the region held back after
prices retreated from record levels. []
"There have been reports out of India that gold buying there
is increasing," said Commerzbank analyst Daniel Briesemann.
"The latest fall in prices is clearly being used to stock up
with gold in the run-up to religious festivals like Diwali,
which takes place next week. Gold scrap sales are relatively low
at the same time."
Among other precious metals, silver <XAG=> was bid at $23.91
an ounce against $23.53.
JPMorgan Chase & Co and HSBC Holdings Plc were hit with two
lawsuits on Wednesday by investors who accused them of
conspiring to drive down silver prices. []
The banks were accused of manipulating the market for COMEX
silver futures and options contracts from the first half of 2008
by amassing huge short positions in silver futures contracts
that are designed to profit when prices fall.
Platinum <XPT=> was at $1,685.67 an ounce against $1,672,
while palladium <XPD=> was at $627.05 versus $612.63. The metals
are currently well supported by fundamentals, analysts said.
"Platinum faces possible supply constraints in South Africa,
and reduced shipments from Russian State inventories may
constrain palladium supply in the coming years," said RBS Global
Banking & Markets in a note.
"The main end use for platinum group metals is in automotive
emission control catalyst," it added. "Demand from this sector
is underpinned by legislation."
(Reporting by Jan Harvey; editing by Keiron Henderson)
