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PRECIOUS-Gold turns lower as dollar gives back losses

* U.S. retail sales unexpectedly flat in July
    * Dollar pares losses vs basket of currencies
    * Coming up: Fed minutes on Aug. 17 from July meeting

 (Recasts, updates prices; adds comment, second byline, NEW YORK
dateline)
    By Marcy Nicholson and Clara Denina 
    NEW YORK/LONDON, Aug 12 (Reuters) - Gold turned slightly
lower as the U.S. dollar pared losses on Friday, with investors
grabbing profits after the metal jumped more than 1 percent
following U.S. retail sales data that were unexpectedly flat in
July.
    Spot gold was down 0.3 percent at $1,334.36 an ounce
by 2:50 p.m. EDT (1850 GMT). It was on track to finish the week
up 0.04 percent.
    Spot gold rallied as much as 1.4 percent to $1,355.80 after
Friday's retail reading for last month surprised economists and
suggested consumer spending was cooling after the second
quarter's brisk 4.2 percent rate of increase. 
   "Real money profit-taking sparked a sell-off that saw gold
surrender the day's gains as sideways trade in gold over the
past few weeks are encouraging some investors to deploy capital
elsewhere," said Tai Wong, director of base and precious metals
trading for BMO Capital Markets in New York.
    "Prices had a new incentive to break higher, with a weaker
dollar and lower than expected data from the U.S., which should
further discourage the Fed to do anything on rates," Saxo Bank
senior manager Ole Hansen said.
    The most active U.S. gold futures for December
delivery settled down 0.5 percent at $1,343.20.
    "As long as gold stays above $1,300 there is no reason why
funds holding big longs should worry too much." 
    The dollar fell 0.6 percent against a basket of main
currencies after data prompted investors to roll back
expectations on when the Federal Reserve will raise rates, but
was down around 0.2 percent later in the day. 
    Gold is highly sensitive to rising U.S. interest rates, as
the opportunity cost of holding the non-yielding asset increases
while boosting the dollar, in which it is priced.
    Federal funds futures implied traders saw a 43 percent
chance the Fed would raise rates at its Dec. 13-14 policy
meeting, down from a 47 percent chance before the data was
released. 
    Minutes from the Fed's July meeting will be released on Aug.
17. 
    Platinum fell 1.7 percent to $1,117.96 an ounce,
after falling 3 percent in the previous session. 
    Palladium was down 0.8 percent at $681.22 and was set
to finish the week with a 1.5 percent loss. The metal had a
roller coaster week, hitting a 14-month high on Wednesday at
$746.10 and posting the biggest one-day rally in more than five
months, before tumbling 5 percent on Thursday. 
    Spot silver fell 1.15 percent at $19.70.

 (Additional reporting By Nallur Sethuraman in Bengaluru;
Editing by David Evans and Chizu Nomiyama)
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