(Repeats to fix technical problem)
* Russia says military drill over; S&P rallies 1 pct
* Failure to hold safe-haven gains frustrates investors
* U.S. delivers air strike in Iraq against militants
* Coming up: CFTC Commitments of Traders report Friday
By Frank Tang and Clara Denina
NEW YORK/LONDON, Aug 8 Gold fell on Friday,
pressured by a lack of physical buyers and gains on Wall Street,
but a U.S. air strike in Iraq and tensions in Middle East
supported prices, which stayed above $1,300 an ounce.
Gold was up around 1 percent for the week, its first weekly
increase in four weeks.
In early trade, gold rallied to a three-week high on news
U.S. aircraft bombed Islamic fighters marching on Iraq's Kurdish
capital of Arbil. But safe-haven buying dried up
after Russia's Defense Ministry said it had finished military
exercises near its border with Ukraine. That news sent the S&P
500 equities index about 1 percent higher.
Earlier this year, gold rallied to just below $1,400 an
ounce as tensions mounted between Russia and the West over
Ukraine. Gold had unwound most of those gains in two weeks.
"It's difficult to get overly excited given gold's multiple
failures to consistently rally on geo-political events,
especially when the volumes behind this move have been rather
light," said Edel Tully, precious metals strategist at UBS.
Spot gold was down 0.3 percent at $1,309.66 by 2:14
p.m. EDT (1814 GMT). In early trade it rose as high as
$1,322.60, the highest since July 14.
U.S. COMEX gold futures for December delivery settled
down $1.50 at $1,311 an ounce, with trading volume about 5
percent below 30-day average, preliminary Reuters data showed.
Bullion was pressured by data showing a strong
second-quarter rebound in productivity at U.S. nonfarm
businesses, reducing wage pressures and allowing the Federal
Reserve to keep interest rates low.
Gold has traded in a tight range around $1,300 over the past
few weeks, supported by investor expectations that the Fed could
raise rates soon.
Physical demand has not been strong enough to support prices
after gold's 3 percent jump in the last three sessions. Gold
premiums in top buyer China have been stuck at $2-$3 an ounce
and demand is much weaker than last year, dealers said.
Natixis analyst Bernard Dahdah said gold prices would be
much lower without geopolitical factors because Asian physical
buying and U.S. investment demand were both lagging.
Among other precious metals, silver edged down 0.2
percent to $19.88 an ounce. Platinum inched up 0.1
percent to $1,473 an ounce, while palladium gained 1.2
percent to $860.50 an ounce.
2:14 PM EDT LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold DEC 1311.00 -1.50 -0.1 1305.70 1324.30 139,073
US Silver SEP 19.941 -0.049 -0.2 19.845 20.185 46,639
US Plat OCT 1478.30 -3.20 -0.2 1475.20 1488.50 5,809
US Pall SEP 860.50 4.45 0.5 854.60 864.40 4,710
Gold 1309.66 -3.54 -0.3 1306.40 1322.60
Silver 19.880 -0.030 -0.2 19.850 20.150
Platinum 1473.00 1.40 0.1 1473.50 1484.00
Palladium 860.50 10.40 1.2 855.50 862.00
TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 156,819 167,410 157,704 14.76 -0.07
US Silver 63,619 44,522 57,723 18.15 -0.49
US Platinum 5,948 8,731 12,456 12.08 -2.44
US Palladium 6,320 4,705 5,588 19.84 0.49
(Additional reporting by Jan Harvey in London, A.
Ananthalakshmi in Singapore; editing by David Evans, Jane Baird
and David Gregorio)