* Gold, silver, platinum retreat from one-week highs
* Dollar moves back into positive territory after data
* Coming up: U.S. FOMC rate decision, 1915 GMT
(Updates prices)
By Amanda Cooper and Jan Harvey
LONDON, Dec 14 (Reuters) - Gold pared gains on Tuesday after
earlier rallying to its highest in a week as data showing U.S.
producer prices and retail sales rose slightly more than
expected in November lifted the dollar into positive territory.
Spot gold <XAU=> was bid at $1,397.80 an ounce at 1612 GMT,
against $1,393.15 late in New York on Monday. U.S. gold futures
for February delivery <GCG1> firmed 80 cents to $1,398.80.
The precious metal earlier climbed more than 1 percent to a
session high at $1,407.70 an ounce as the U.S. currency wilted
ahead of a U.S. policy-setting meeting.
Policy makers are expected to assess the Federal Reserve's
$600 billion bond-buying plan at the meeting on Tuesday, but are
not forecast to signal any shift or change in the programme.
While it remains vulnerable to short-term currency
gyrations, gold looks set to be firmly supported by caution on
the global economic outlook.
"Gold is benefiting on the one hand from inflation-led
buying in Asia, and from safe-haven-led buying particularly in
North America where there is a lack of confidence in issues like
the budget deficit being solved," said HSBC analyst James Steel.
"It is benefiting for different reasons in different
regions."
Gold has risen by over 6 percent so far this quarter, driven
largely by fluctuations in the dollar and by concerns over the
outlook for growth in the United States and the euro zone's
deepening debt crisis.
The euro <EUR=> gave up early gains that had taken it to a
three-month high against the U.S. currency on Tuesday, while the
dollar index, which measures the currency's performance against
a basket of six others, moved 0.1 percent higher. []
Strength in the U.S. unit usually weighs on gold, as it
curbs the precious metal's appeal as an alternative asset and
makes dollar-priced commodities more expensive for holders of
other currencies.
YIELD BARRIER
However, a near half-percentage point rise in Treasury
yields <US10YT=RR> this month presents a serious challenge to
investors in gold, which bears no interest and incurs a higher
opportunity cost as returns on other asset classes increase.
While dollar weakness usually acts as a catalyst for bullion
buying, soft investor demand, as evidenced by continued outflows
from some of the world's largest exchange-traded precious metals
funds, could temper price gains in gold. []
Silver <XAG=> gave up early gains in line with gold and was
bid at $29.45 an ounce against $29.48, having earlier touched a
high of $29.92.
Britain's Financial Times newspaper reported on Tuesday that
JPMorgan had cut a large position in the metal. The company's
silver futures positions would be "materially smaller" in the
future, the FT reported a source as saying. []
Silver has been a major beneficiary of the investor push
into commodities this year and the price is now holding around
30-year highs. But not all investors are as convinced that
silver can maintain this performance.
"It would seem as if investors are treating silver as a
cyclically sensitive industrial metal during bullish periods and
as a 'safe' precious metal during corrections," said asset
manager Tiberius in its monthly update.
"Silver's fundamentals are poor, however, and we believe it
will tend to underperform both industrial as well as precious
metals in the months to come."
Platinum <XPT=> also rose to a one-week high of $1,713.49,
before easing to show a 0.2 percent loss on the day at
$1,698.49, while palladium <XPD=> was flat at $754.50.
(Editing by Alison Birrane)
