* U.S. retail sales rise at fastest pace in five months
* Bullion fails to push above $1,600/oz for second day
* Coming up: U.S. initial jobless claims on Thursday
(Updates with closing prices, adds CFTC investigation, new
By Frank Tang and Carole Vaporean
NEW YORK, March 13 Gold fell on Wednesday as a
strong U.S. retail sales report boosted optimism about the U.S.
economy and after prices failed for a second time to surpass
$1,600 an ounce, prompting investors to reduce bullion
The metal rose to within $1 of $1,600 on hopes that the
European Central Bank will extend its loose monetary policy
following euro zone industrial output data showing a
surprisingly big fall in January.
Bullion later turned lower after it failed to break above
$1,600 for a second day. The dollar index's seven-month
high and gains in U.S. equities also weighed on gold's
"The failure of prices to break above $1,600 showed that the
money managers, who had become buyers, were cautiously bullish,"
said Carlos Perez-Santalla, commodities broker at PVM Futures.
Spot gold was down 0.19 percent at $1,589.10 an ounce
by 3:26 p.m. EDT (1926 GMT), having earlier hit a two-week high
at $1,599.10. U.S. COMEX gold futures for April delivery
settled $3.30 lower at $1,588.40 an ounce.
Gold came under pressure after data showed U.S. retail sales
expanded at their fastest pace in five months in February. The
report came on the heels of strong gains in employment and
manufacturing, increasing chances the Federal Reserve might halt
its bond-buying earlier than thought.
Late in the day, the Wall Street Journal, citing people
familiar with the situation, said the top U.S. derivatives
regulator began internal discussions on whether to investigate
the daily fixing of gold and silver prices in London for
SPDR GOLD TRUST DECLINES
Pointing to the drop in a key gauge of investor interest,
analysts said investors remained lukewarm towards gold.
Holdings of SPDR Gold Trust, the world's biggest
gold-backed, exchange-traded fund, fell for a fourth straight
session to 1,236.307 tonnes on March 12, its lowest since
Fund outflows this year of 114.51 tonnes has more than wiped
out last year's inflow of 96.25 tonnes.
The next major economic reading comes on Friday with U.S.
consumer inflation data. With only a small rise forecast for the
February gauge, analysts said there may be little reaction to
the report. Investors will also be anticipating any word from
officials at next week's U.S. central bank policy meeting.
An exit from its stimulus policy would deal a heavy blow to
gold, which has thrived on demand from investors who buy gold to
hedge against the inflationary risks of loose monetary policies.
Despite an improving economic outlook, analysts expect the
Fed's current $85 billion monthly purchases of mortgage-backed
securities and Treasuries to last through 2013 and into 2014.
Longer term, analysts see gold deriving support from central
banks looking to diversify away from currencies, a report by the
World Gold Council, an industry group, said.
Spot silver was down 0.72 percent at $28.89 an ounce.
Platinum fell 0.49 percent to $1,587.21, and palladium
dropped 0.3 percent to $768.22 an ounce.
4:06 PM EDT LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold APR 1588.40 -3.30 -0.2 1584.40 1598.80 134,392
US Silver MAY 28.958 -0.213 -0.7 28.835 29.280 31,924
US Plat APR 1593.10 -1.90 -0.1 1586.50 1602.00 7,867
US Pall JUN 771.25 -4.25 -0.5 766.15 776.65 2,618
Gold 1588.06 -4.03 -0.3 1586.23 1599.10
Silver 28.880 -0.220 -0.8 28.880 29.270
Platinum 1585.75 -9.25 -0.6 1589.00 1597.49
Palladium 768.22 -2.28 -0.3 769.02 773.75
TOTAL MARKET VOLUME 30-D ATM
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 154,868 174,963 12.92 -5.12
US Silver 36,516 52,746 19.46 -0.74
US Platinum 9,410 10,829 17.18 -0.05
US Palladium 2,633 5,242
(Additional reporting by Clare Denina in London; Editing by
Grant McCool and Kenneth Barry)