* Federal Reserve report showed concern about slow growth
* Gold's upside may be limited by tame inflation outlook
* Upcoming: Producer prices, industrial output, Philly Fed
(Adds Federal Reserve minutes reaction, rewrites
throughout. Updates prices, comment. Changes byline, previous
dateline LONDON.)
By Carole Vaporean
NEW YORK, July 14 (Reuters) - Gold turned moderately lower
in late trade on Wednesday, chasing the euro and U.S. equity
markets down after the Federal Reserve issued a report saying
it should be ready to take additional measures to combat a
softening economy if necessary.
Spot gold <XAU=> pared gains to $1,209.05 by 2:42 p.m. EDT
(1842 GMT) from a high at $1,217.85 an ounce, compared with the
previous session's late quote at $1,210.65.
August COMEX gold futures <GCQ0> finished $6.50 lower at
$1,207 on the COMEX metals division of the New York Mercantile
Exchange.
Gold was pushed off earlier highs, reached as investor
concern over the U.S. economic outlook prompted a jump in the
euro. When the euro and U.S. equity markets turned lower in
afternoon trade, gold prices followed.
All three markets were responding to lessening investor
interest in taking on risk after the Federal Reserve's meeting
minutes revealed its concern about a weakening U.S. economy.
The euro pared gains versus the dollar after the Federal
Reserve felt last month that it should be ready to consider
additional steps to boost the U.S. economy if the outlook took
a noticeable turn for the worse. []
Major U.S. stock indexes also fell after the release of the
Federal Reserve's meeting minutes. []
"As a result of the change in financial conditions, most
participants revised down slightly their outlook for economic
growth," minutes of the June 22-23 meeting of the Fed's policy
panel released on Wednesday said. []
Because the Fed minutes came out after most gold traders
had completed their transactions for the day, some sellers may
hit gold again on Thursday, said Sterling Smith, analyst at
Country Hedging Inc in St. Paul, Minnesota.
Earlier, gold rallied after sales at U.S. retailers fell in
June, for the second straight month, adding to evidence the
economic recovery was proceeding at a moderate pace.
[]
But the softer U.S. growth outlook underlying the Fed's
message also suggested a tame outlook for inflation, which
could hurt gold's upside potential.
"More than fear, inflation is gold's food," said Smith.
Despite the fluctuations, gold remained within the range
that has been developing since July 1, with factors limiting
both its up and downsides.
"You have got to be frightened to want to be long of gold.
But we still have uncertainties," said Credit Agricole analyst
Robin Bhar.
"There are still worries about debt, about currency
devaluation, about inflation becoming higher. That is all
supportive of this notion of there being a fairly solid floor
for gold," he added.
"The risk is now for a choppy move higher towards
$1,225/27. However, in the least, a recovery above $1,235 is
needed to suggest that gold is primed to post new 2010 highs,"
said Barclays Capital in a note.
Among other precious metals, silver <XAG=> rose by over 1
percent to $18.44 an ounce, but then pared those gains to
$18.29 compared with $18.20 in the previous session.
The gold-silver ratio -- how many ounces of silver are
needed to buy an ounce of gold -- hit a two-week low of 66.5 on
Tuesday as silver outperformed gold in a rising market.
"We require a close below 65.55 to bring in fresh selling
of the ratio," said ScotiaMocatta in a note.
Elsewhere, spot palladium <XPD=> at $463.50 per ounce was
barely up from $463 previously.
Prices at 3:37 p.m. EDT (1657 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCQ0> 1207.00 -6.50 -0.5% 10.1%
US silver <SIU0> 18.290 0.033 0.0% 8.6%
US platinum <PLV0> 1520.60 -14.80 -1.0% 3.4%
US palladium <PAU0> 465.80 -3.35 -0.7% 13.9%
Gold <XAU=> 1208.05 -2.60 -0.2% 10.2%
Silver <XAG=> 18.32 0.12 0.7% 8.8%
Platinum <XPT=> 1520.00 -4.50 -0.3% 3.7%
Palladium <XPD=> 463.50 0.50 0.1% 14.3%
Gold Fix <XAUFIX=> 1207.00 -5.25 -0.4% 9.3%
Silver Fix <XAGFIX=> 18.29 29.00 1.6% 7.7%
Platinum Fix <XPTFIX=> 1523.00 5.00 0.3% 3.9%
Palladium Fix <XPDFIX=> 465.00 2.00 0.4% 15.7%
(Additional reporting by Jan Harvey and Amanda Cooperin
London; Editing by Lisa Shumaker)
