PRECIOUS-Gold holds ground as investors eye Fed stimulus outlook

A. Ananthalakshmi
Wednesday, 30 Oct 2013 | 3:30 AM ET

* Investors edgy ahead of Fed statement

* Gold recovers from early losses, still below 5-week high

* U.S. dollar strength weighs on bullion

* Coming up: Fed statement at 1800 GMT

(Updates prices) SINGAPORE, Oct 30 (Reuters) - Gold edged higher on Wednesday as investors bet the Federal Reserve would stick to its bullion-friendly stimulus measures but the metal was still trading below five-week highs as a stronger dollar kept gains in check. Gold has gained about 7 percent from a three-month low hit on Oct. 15 on hopes that weak U.S. data and the repercussions of budget battles in Washington would prompt the Fed to delay the winding-down of its $85 billion monthly bond purchases. Spot gold ticked up 0.2 percent to $1,346.11 an ounce at 0702 GMT after hitting a session low of $1,339.14 earlier. Gold prices slipped on Tuesday from the previous session's five-week high as traders took profits after the dollar strengthened, raising the possibility that Fed expectations might already be priced into markets. "Gold has always been right up there as the commodity that is most exposed to any Fed decision to cut back on bond purchases," said Song Seng Wun, an economist at CIMB. "The (Fed) meeting will decide whether more money will be taken off the table or whether there will be a rebound." Song said any rise in gold would depend on U.S. economic data, among other key factors determining when the Fed moves to reduce its stimulus. The Fed will make a statement later on Wednesday at the end of its two-day meeting. It is widely expected to say it will continue with its stimulus measures and will not reduce its asset purchases. Chinese gold prices recovered slightly on Wednesday after ending at a discount to global prices in the previous session for the first time this year. Fears of a credit tightening had prompted Chinese investors to sell bullion for cash. Indian premiums stayed near record highs due to a supply crunch. Precious metals prices 0702 GMT

Metal Last Change Pct chg YTD pct chg Volume Spot Gold 1346.11 2.42 +0.18 -19.61 Spot Silver 22.62 0.10 +0.44 -25.30 Spot Platinum 1463.00 3.00 +0.21 -4.69 Spot Palladium 744.50 0.50 +0.07 7.59 COMEX GOLD DEC3 1346.20 0.70 +0.05 -19.67 18408 COMEX SILVER DEC3 22.68 0.18 +0.81 -25.18 6162 Euro/Dollar 1.3746 Dollar/Yen 98.20

COMEX gold and silver contracts show the most active months

(Reporting by A. Ananthalakshmi; Editing by Alan Raybould and Tom Hogue)