* ISM data shows U.S. manufacturing expanded in August
* Talks commence between Implats, union over SAfrican strike
* Palladium prices hit year high
(Updates prices, adds detail, comment)
By Jan Harvey
LONDON, Sept 1 (Reuters) - Gold climbed on Tuesday after
data showed the U.S. manufacturing sector grew more than
expected in August, lifting appetite for assets seen as higher
risk, such as commodities, and boosting inflation fears.
But gains were capped by a slight recovery in the U.S.
dollar and by a reduction in the metal's appeal as a haven.
Spot gold <XAU=> was bid at $954.40 an ounce at 1444 GMT,
against $949.65 an ounce late in New York on Monday. U.S. gold
futures for December delivery <GCZ9> on the COMEX division of
the New York Mercantile Exchange rose $2.70 to $956.20.
The data from the Institute of Supply Managers showed the
U.S. manufacturing sector returned to growth in August after a
prolonged slump, while pending home sales raced to a two-year
high in July. [] []
The news boosted U.S. stock markets, while European shares
pared earlier losses. [] []
Simon Weeks, head of precious metals at the Bank of Nova
Scotia, said the news was mixed for the gold market.
"On the one hand, it is weaker as people unwind safe haven
positions and put risk on again, and on the other, it is high
due to increased concerns over inflationary pressure," he said.
"There is so much going on this week in terms of data, the
ECB meeting and then the G20 that it will probably be next week
before people have a clear understanding of how they want to
position themselves," he added.
Analysts said ahead of the data that a positive view of the
economy could help ailing jewellery and industrial sales, which
have proved a drag on prices in recent months. The dollar index
<.DXY> was a touch firmer after the data. []
Oil prices rose more than $1 a barrel, meanwhile, after the
data boosted hopes for an economic recovery, while prices of
industrial metals such as copper pared losses. [] []
Gold demand in India, the world's largest bullion market
last year, abated as traders awaited further price falls. Some
buying was seen after prices slipped below $950 an ounce, but
this had not persisted, traders said. []
IMPORTS FALL
India's gold imports fell to 12-14 tonnes in August from 98
tonnes a year before as high prices and weak monsoon rains
dented demand, the head of the Bombay Bullion Association said.
[]
Gold imports to Turkey, one of the top three consumers of
the metal, also fell 74 percent year-on-year to 12.517 tonnes,
as demand in the local market weakened. []
Among other precious metals, silver <XAG=> firmed to $14.95
an ounce against $14.89, while platinum <XPT=> was at $1,234 an
ounce against $1,237 and palladium <XPD=> was at $289 against
$288.50.
Palladium rose to a year high of $291.50 an ounce in earlier
trade, helped by hopes demand for the autocatalyst material may
recover and strength in other precious metals.
"Palladium... has the potential to test the $300-05 area,
however we remain concerned about the level of speculative longs
in the market," said The BullionDesk.com analyst James Moore.
"(These) leave the metal vulnerable to a rapid correction
should those longs become spooked."
Talks between South Africa's mine workers' union and Impala
Platinum <IMPJ.J> began on Tuesday in an attempt to end a strike
over wages. Platinum's gains have been capped by weak demand
from carmakers and the perception above-ground stocks are
plentiful. []
(Editing by Keiron Henderson)
