Gold ends flat on quiet trade, eyes on Bernanke

NEW YORK Thu Aug 30, 2012 4:25pm EDT

Gold bars are displayed at a gold jewellery shop in the northern Indian city of Chandigarh April 11, 2012. REUTERS/Ajay Verma

Gold bars are displayed at a gold jewellery shop in the northern Indian city of Chandigarh April 11, 2012.

Credit: Reuters/Ajay Verma

NEW YORK (Reuters) - Gold ended flat on Thursday as weakness in other financial markets prompted bullion investors to hold their bets ahead of a speech by U.S. Federal Reserve Chairman Ben Bernanke which investors will watch for clues to monetary policy.

The metal finished close to even for the day after an early slide that tracked declines on Wall Street and in U.S. crude futures. Investors were cautious as they waited for Bernanke's speech at Friday's annual symposium of central bankers and finance ministers in Jackson Hole, Wyoming. .N <O/R>

In the last eight sessions, gold has gained 3 percent on expectations that Bernanke's speech will signal easier monetary policy is on the way. Some analysts said gold might come under pressure if Bernanke does not signal imminent easing.

"This (rally) may mean that the risk for gold is to the downside if the Fed Chairman does not signal clearly - or loudly - enough that further monetary easing is likely on the way," said James Steel, HSBC's metal analyst.

Spot gold was down 28 cents at $1,655.66 an ounce by 3:13 p.m. EDT (1913 GMT).

U.S. gold futures for December delivery settled down $5.90 an ounce at $1,657.10, with trading volume at 40 percent below its 30-day average, preliminary Reuters data showed.

Silver dropped 0.8 percent to $30.43 an ounce.

Last week, gold broke above a four-month trading range, passing $1,640 an ounce after the minutes of the Fed's latest policy meeting revealed the central bank intended to economic stimulus soon unless conditions improve dramatically.

Some traders expect Bernanke to hint at a third round of U.S. bond buying, known as quantitative easing or QE3. Bernanke announced the first two rounds of QE at Jackson Hole.

But others contend the Fed may stand pat due to recent data showing U.S. consumer spending rose in July by the most in five months, and the Fed's Beige Book report showing a pickup in retail activity, including auto sales.

Citigroup analyst David Wilson said U.S. stock market hovering near a four-year high suggested the Fed could refrain from action especially before November's U.S. federal election.

Some said the Fed could wait for next week's nonfarm payroll report before reaching a decision on stimulus at its September policy meeting on September 12-13.

GOLD ETF INFLOWS RISE

Inflows into gold exchange-traded funds have risen sharply this month, with holdings of the largest, New York's SPDR Gold Trust up nearly 38 tonnes so far this month, their largest monthly inflow since November.

Profit taking sent platinum group metals lower after recent gains on supply worries amid deadly violence and work stoppage at a major platinum mine owned by South Africa's Lonmin, the world's third-largest producer of the metal.

Spot platinum fell 0.4 percent at $1,504.75 an ounce, while spot palladium fell 2.3 percent to $613.62 an ounce.

(Additional reporting by Jan Harvey in London, Lewa Pardomuan in Singapore; Editing by Marguerita Choy and David Gregorio)

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