* Gold flat in line with dollar, oil ahead of Fed decision
* Traders eye accompanying statement for hawkish tone
* Russian gold output seen up 5.2 percent in Jan-May period
(Recasts with prices, comment, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, June 25 (Reuters) - Gold was steady in Europe on
Monday, in line with the dollar and oil, as traders awaited a
decision by the Federal Reserve on interest rates and its
accompanying statement on future monetary policy.
The U.S. central bank is widely expected to leave interest
rates unchanged at 2 percent. However, if it fails to adopt a
widely expected hawkish tone in its statement, the dollar could
suffer, buoying gold.
Gold <XAU=> was steady at $887.30/888.30 an ounce at 0936
GMT from $888.70/889.70 an ounce late in New York on Tuesday.
"No-one is going to do anything before (the end of the Fed
meeting)," said UBS analyst John Reade. "The question is whether
they are going to do anything afterwards."
"If (Fed officials) come out and do nothing, which is what
everyone expects, and they take a moderately hawkish line, then
gold is pretty stuck here."
"The more hawkish they are, the firmer the dollar will be,
and therefore the worse for gold," he added.
Gold moves in the opposite direction to the dollar, as it is
often bought as an alternative investment to the U.S. currency.
Dollar-priced gold also become cheaper for holders of other
currencies as the greenback softens.
Oil, the other key external driver of gold, was also steady,
trading just above $137 a barrel. Oil traders awaited stockpile
data from the U.S. Dept of Energy later in the session for
direction. []
"Crude oil might show again wide swings, and it remains
quite open in which direction crude oil would push gold," said
Dresdner Kleinwort consultant Peter Fertig in a note.
In supply news, an industry body said on Wednesday it
expected Russian gold output to rise by 5.2 percent in the first
five months of 2008 to 41.834 tonnes. []
Russia is the world's fifth largest supplier of mined gold.
The precious metal has benefitted this week from a dip in
prices, which are down around $30 from a month ago.
A $25 price slide on Monday was met by good buying from
jewellers and institutional investors, with inflows into New
York's largest ETF rising 2 percent that day.
"Jewellery demand, although low, is reported to pick up when
prices fall to $880 an ounce, indicating a level of support,"
said Fairfax analyst John Meyer.
"No doubt if there was a sharp fall in the gold price then
jewellers could start stocking up, since longer term
expectations are of higher prices to come."
Russian mine production has been falling for the last five
years, but producers said this year may see a turning point in
the trend.
Elsewhere the world's number four gold miner, Gold Fields
Limited <GFIJ.J>, said its fourth-quarter output is likely to be
4.5 percent higher than the previous quarter. []
Production at its South African operations is likely to be
up nearly 7 percent, it added.
Among other precious metals, silver edged up to $16.74/16.79
from $16.64/16.70 late in New York on Tuesday.
Spot platinum <XPT=> was unchanged at $2,011.00/2,031.00
late in New York, while spot palladium <XPD=> firmed to
$461.00/469.00 an ounce from $464.00/472.00 an ounce.
(Reporting by Jan Harvey: Additional reporting by Raissa
Kasolowsky; editing by Christopher Johnson)
