* Dollar extends gains after U.S. CPI, housing starts data
* SPDR fund posts first inflow in almost four weeks on
* Palladium sinks from Monday's 13-year high
(New throughout with market comment, updated prices; adds
byline, NEW YORK dateline)
By Chris Prentice and Clara Denina
NEW YORK/LONDON, Aug 19 Gold futures eased on
Tuesday, under pressure from buoyant equities markets and a
stronger dollar after upbeat U.S. economic data, and palladium
sank from Monday's 13-year high as traders booked profits.
Trading of bullion was choppy as dealers monitored
international political tensions.
Spot gold, higher initially, fell 0.1 percent to
$1,296.15 an ounce by 2:16 p.m. EDT in subdued volumes.
U.S. gold futures for December delivery slipped 0.2
percent to settle at $1,296.70 an ounce, down for a third
The U.S. dollar extended gains to be up 0.4 percent against
a basket of major currencies after data showed U.S.
housing starts rebounded strongly in July after two straight
months of declines. Separately, U.S. consumer prices barely rose
during the same month.
"Gold obviously didn't like the U.S. CPI and housing data,
which boosted the dollar," Saxo Bank senior manager Ole Hansen
Easing international political tensions boosted investors'
risk appetite, driving them to equities and away from bullion.
Tensions in Ukraine and the Middle East have largely
contributed to gold's near 8 percent gain this year, igniting
bouts of demand when investors turned to assets perceived as an
insurance against risk.
Palladium dropped 1.5 percent to $875.70 an ounce.
Prices on Monday hit a 13-year high of $900 on worries over
tight supplies and prospects of strong demand.
"At root, the strength is in the tight fundamentals. But the
market is vulnerable to profit-taking here," said HSBC precious
metals analyst James Steel. "Physical buying remains moderate
but not spectacular."
Traders awaited the annual meeting of central bankers in
Jackson Hole, Wyoming, on Thursday, which includes a speech on
Friday from Federal Reserve chief Janet Yellen that could give
clues on the timing of any rate rise.
The U.S. central bank is expected to raise rates in the
middle of next year, depending on the strength of the economy.
Higher interest rates would encourage investors to withdraw
money from non-interest-bearing assets, such as gold. The metal
hit record highs after the Fed slashed rates in the wake of the
"Traders will be watching eagerly later in the week at the
FOMC minutes and Jackson Hole address to gauge any clues to the
timing of a Fed rate hike," MKS said in a note, referring to the
policy-setting Federal Open Market Committee.
The metal gained some support earlier from news that
holdings in the SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, rose 2.09 tonnes to 797.69
tonnes on Monday, the first inflow in nearly four weeks.
Silver touched a fresh two-month low of $19.33 an
ounce, while platinum edged down 0.4 percent to $1,433.25
(Additional reporting by A. Ananthalakshmi in Singapore;
Editing by David Clarke, William Hardy and James Dalgleish)