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PRECIOUS-Gold falls on strong dollar after U.S. data, easing North Korea tensions

    * N. Korea signals delay to missile launch plans
    * U.S. retail data exceeds expectations
    * Empire State business index highest since Sept. 2014
    * Dollar, stocks, bond yields rise
    * Technical support at $1,261.30
    * Gold may trade sideways ahead the Fed minutes Weds -
analyst

 (Adds comment, latest data, price move; Adds NEW YORK dateline)
    By Devika  Krishna Kumar and Peter Hobson
    NEW YORK/LONDON, Aug 15 (Reuters) - Gold fell nearly 1
percent, down for a second day on Tuesday after
better-than-expected U.S. economic data and easing tensions over
North Korea encouraged investors to buy riskier assets, boosting
stocks, the U.S. dollar and bond yields. 
    Gold, seen as a safe haven in times of uncertainty, rose to
a two-month high of $1,291.86 on Friday after a week of
escalating military threats between Washington and Pyongyang. 
    But fears of conflict eased when North Korean leader Kim
Jong Un on Tuesday signalled he would delay a decision on firing
missiles towards Guam, a U.S. territory in the Pacific.
             
    "Gold longs liquidated as the chances of a Korean
catastrophe appeared to fall significantly overnight and this
morning surprisingly strong U.S. retail sales data buoyed U.S.
yields and the dollar, which pressured gold further to lows,"
said Tai Wong, director of base and precious metals trading for
BMO Capital Markets in New York.
    "Silver retreated sharply in sympathy as well but both
metals have held important support and may trade sideways ahead
the Fed minutes tomorrow."
    Spot gold        was down 0.8 percent at $1,271.58 an ounce
by 3:07 p.m. EDT (1907 GMT), taking losses since Friday's high
to nearly 2 percent. 
    U.S. gold futures         for December delivery fell 0.8
percent to settle at $1,279.70. Silver        was down 2.1
percent at $16.65 an ounce, falling below its 100- and 200-day
moving averages.
    Gold's fall accelerated after strong U.S. retail sales in
July and strength in an index of business conditions in New York
state suggested strong economic growth.             
            
    The dollar        rose to near a three-week high against a
basket of currencies on Tuesday, while prices for U.S.
Treasuries fell. Stocks on Wall Street were mixed.            
    A strong dollar is negative for gold prices because it makes
dollar-priced gold costlier for holders of other currencies,
while higher bond yields raise the opportunity cost of holding
non-yielding bullion. 
    Also weighing on gold was the prospect of another increase
in U.S. interest rates after an influential Federal Reserve
official said on Monday he expected one more rise this year.
            
    Gold is highly sensitive to rising interest rates because
they push bond yields higher and tend to strengthen the dollar.
    Investors await minutes from the Fed's July meeting to be
released on Wednesday for clues on when a rate hike is next
likely. 
    Speculative investors who had in recent weeks built up large
bets on higher prices were being forced to reduce their
positions, pushing prices lower, Saxo Bank analyst Ole Hansen
said.             
    The retreat from Friday's high is the third time this year
that gold has failed to reach $1,300, a key technical level.
    Technical Fibonacci supports for gold were at $1,274.70 and
$1,261.30, ScotiaMocatta analysts said in a note. 
    In other precious metals, Platinum        was down 0.7
percent at $958.5, while palladium        was 1.1 percent lower
at $885.10 an ounce.

 (Additional reporting by Apeksha Nair and Nithin Prasad in
Bengaluru; Editing by David Holmes and Jane Merriman)
  
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