* Gold may hit $1,100 if Fed reaffirms low rate policy
* Funds' buying keeps momentum up, seen driving prices higher
* SPDR Gold holdings inch up []
* Tokyo markets were closed on Tuesday for public holiday
By Chikako Mogi
TOKYO, Nov 4 (Reuters) - Gold eased on Wednesday as investors
took profits a day after it hit record highs despite the dollar's
strength, but sentiment improved on bullion's growing status as a
destination for diversifying official reserves.
Weakness in equities markets, resurfacing worries about the
U.S. and European banking sectors and expectations for U.S.
interest rates to remain low for some time are favouring gold as a
safe-haven asset, analysts said.
Commodities markets, especially gold, are favoured by
trend-following funds and news of India's central bank buying a
large amount of gold from the International Monetary Fund was
taken as reinforcing such bullish sentiment and keeping up the
buying momentum.
"It's all driven by funds and their bullish sentiment, which
was reinforced by news of the IMF sale of gold to India," said
Kazuhiko Saito, chief analyst at Fujitomi Co in Tokyo.
He said there was relief India was the buyer as the country's
official gold holdings are low relative to Europe, and India
therefore is not seen as being in haste to sell bullion.
"Gold may test $1,100 in the near term" if the Federal
Reserve maintains its pledge on low interest rates when policy
makers conclude a two-day meeting later on Wednesday, he said.
Gold swept to a record high on Tuesday despite the dollar's
rise as the IMF's 200-tonne sale of gold to India underscored
gold's increasing status as an official reserve and fuelled
speculation that other governments including Beijing may be ready
to diversify their reserves.
"Once we broke above the previous record of $1,070 we got
momentum buying. It is more of a technical move," said Adrian
Koh, an analyst at Phillip Futures in Singapore.
Spot gold <XAU=> was at $1,083.60 per ounce at 0550 GMT, down
0.1 percent from New York's notional close of $1,084.50. On
Tuesday, spot gold hit an all-time high of $1,087.45.
U.S. gold futures for December delivery <GCZ9> inched down
0.1 percent to $1,084.20 per ounce, compared to $1,084.90 an
ounce on the COMEX division of NYMEX. Futures hit a record high
of $1,088.50 on Tuesday.
The market surge was also reflected in investment flows.
The world's largest gold-backed exchange-traded fund, SPDR
Gold Trust <GLD>, said its holdings rose to 1,108.399 tonnes as
of Nov. 3, up 4.88 tonnes or 0.4 percent from the previous
business day. []
Japanese financial markets were closed on Tuesday for a
public holiday.
The dollar steadied below a one-month high on a basket of
major currencies as investors awaited the Fed statement. []
Gold market participants including banks, miners and
investment funds gathered for the London Bullion Market
Association's annual conference in Edinburgh, which ended on
Tuesday. []
Precious metals prices at 0545 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 1083.25 -1.25 -0.12 23.08
Spot Silver 17.17 -0.03 -0.17 51.68
Spot Platinum 1355.50 0.00 +0.00 45.44
Spot Palladium 325.00 0.50 +0.15 76.15
TOCOM Gold 3160.00 121.00 +3.98 22.81 76480
TOCOM Platinum 3950.00 116.00 +3.03 48.94 15420
TOCOM Silver 502.80 24.60 +5.14 57.47 555
TOCOM Palladium 959.00 18.00 +1.91 74.36 538
Euro/Dollar 1.4724
Dollar/Yen 90.35
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Additional reporting by Miho Yoshikawa; Editing by Michael
Watson)
