* Dollar extends gains after U.S. CPI, housing starts data
* SPDR fund posts first inflow in almost four weeks on Monday
* 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 straight session.
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 said.
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 financial crisis.
"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 an ounce. (Additional reporting by A. Ananthalakshmi in Singapore; Editing by David Clarke, William Hardy and James Dalgleish)