Gold extends losses as stock markets rebound

By Jan Harvey

LONDON (Reuters) - Gold edged lower on Wednesday as stock markets rebounded after two days of losses, with the metal remaining under pressure from expectations that central banks' commitment to ultra-loose monetary policy may be waning.

A firmer tone to U.S. data and recent comments from some Federal Reserve officials have led traders to speculate that the central bank may be set to taper its $85 billion monthly bond-buying programme.

That would undermine support for gold, which has benefited in recent years from the low interest rates and the rising fears of inflation that have resulted from ultra-loose monetary policy.

Spot gold was down 0.3 percent at $1,375.06 an ounce at 1335 GMT, while U.S. gold futures for August delivery were down $2.50 an ounce at $1,374.50.

European shares bounced back on Wednesday from the previous session's six-week lows, while U.S. stocks opened higher on Wall Street.

"Thinking about safe havens versus risk-on assets, in the short term gold might be subdued as money goes into other asset classes," Mitsubishi analyst Jonathan Butler said.

The dollar index was flat.

Analysts said volatility in the financial markets may continue until the Fed's June meeting next week and an accompanying statement from Fed Chairman Ben Bernanke on Wednesday.

"Markets will however wait for cues from the Fed next week," Pradeep Unni, senior analyst at Richcomm Global Services, said. "Lower imports from India after the duty hike will also be negative for gold."

BUYING SOFT IN INDIA, CHINA

Demand was subdued in India, the world's largest gold consumer, which last week moved to cut gold imports by lifting import duties to 8 percent. Gold imports have been major contributor to India's wide current account deficit.

India's economic affairs secretary, Arvind Mayaram, said that government did not need to act to further to moderate gold imports because recent steps already had considerable impact.

A lack of buying in China, which is celebrating a national holiday, further undermined gold.

"With the Chinese out until Thursday, the market is lacking a key stabilising factor," ANZ said in a note. "We continue to see little support for gold at least until their return."

Silver was up 0.4 percent at $21.69 an ounce. The gold/silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, stood at 63.5, retreating from last week's 2-1/2 year high of 64 as silver outperformed.

Spot platinum was down 0.2 percent at $1,476.49 an ounce, while spot palladium was up 0.3 percent at $751.62 an ounce.

Platinum producer Lonmin said it was confident it could reach a recognition agreement with South Africa's Association of Mineworkers and Construction Union (AMCU) and avert a strike.

AMCU wants to be recognised as the majority union at Lonmin, where it now represents over 70 percent of the workforce. The union has threatened to issue a strike notice if talks fail. (Editing by Jason Neely)