PRECIOUS-Gold steadies on uncertainty over Fed policy
* Gold supported by U.S. budget, debt ceiling talks
* Uncertainty over Fed policy keeps prices in range
* Chinese demand weak ahead of week-long holiday
(Updates throughout, changes dateline, pvs SINGAPORE)
LONDON, Sept 27 (Reuters) - Gold steadied near $1,320 an ounce on Friday as uncertainty over the outlook for U.S. monetary policy kept buyers on the sidelines, although wrangling over the U.S. budget supported prices and pressured the dollar.
The Federal Reserve surprised markets last week by opting to maintain its massive monetary stimulus measures, but some officials have since said the bank could still begin tapering its $85 billion monthly bond-buying programme later this year.
Spot gold was at $1,321.90 an ounce at 0915 GMT, little changed from the previous day, while U.S. gold futures for December delivery were down $1.80 an ounce at $1,322.30. Uncertainty over tapering has kept prices in their narrowest range in ten weeks this week.
The prospect of an end to ultra-loose monetary policy, which keeps interest rates low while stoking inflation fears, and has been a major driver of gold's bull run after the financial crisis, has knocked prices 20 percent lower this year.
"Many traders are sidelined at the moment as a general level of confusion exits," Saxo Bank's head of commodity research Ole Habnsen said. "Support is obviously coming from the U.S., where lawmakers are once again playing Russian roulette with the budget and debt limit."
"At the same time a couple of stronger data points and recent Fed comments do not completely rule out the potential for tapering later this year," he added. "But for now the main focus on the U.S. Congress."
U.S. House of Representatives Republicans on Thursday refused to accede to President Barack Obama's demand for straightforward bills to run the government beyond Sept. 30 and to lift borrowing authority to avoid a default.
The move does not bode well for prompt resolution of fiscal battles that could lead to a government shutdown on Oct. 1 and a default in mid-October.
PHYSICAL DEMAND WEAK
Physical demand in China was weak, traders in Hong Kong said, with premiums on the Shanghai Gold Exchange to London spot prices falling to multi-month lows of $7 an ounce this week from about $30 in April-May.
Some gold shipments to China have been postponed by a few weeks as an upcoming holiday and volatile prices curb demand for the metal, they said. Chinese markets will be closed Oct. 1-7 for the National Day holiday.
"People are postponing shipments to the later part of October. Right now demand is very quiet over there," said one dealer with a bank in Hong Kong.
Silver was down 0.9 percent at $21.49 an ounce. The metal is heading for a third successive weekly loss.
The gold/silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, rose to a six-week high at 61.4 on Friday as silver underperformed, making it cheaper compared to gold.
Spot platinum was up 0.3 percent at $1.409.24 an ounce, while spot palladium was up 0.1 percent at $718.81 an ounce.
Platinum outperformed due to support from a strike over job cuts at Anglo American Platinum's operations in South Africa Amplats, the world's top platinum producer, said last month it would cut 4,800 jobs.
Platinum is set to fall 1 percent this week however, posting a fifth straight week of losses for the first time since April.
(Additional reporting by A. Ananthalakshmi in Singapore, editing by William Hardy)