* Weak dollar, stronger risk appetite favor gold
* Data shows funds kept big bets on gold
* Coming up: US mortgage refinancing index due Wednesday
(Recasts, updates prices, adds second byline/dateline)
By Frank Tang and Michael Taylor
NEW YORK/LONDON, Aug 17 (Reuters) - Gold rose to a 1-1/2
month high on Tuesday, gaining for a fourth straight session as
a weak dollar and the resurgence of risk appetite prompted
investors to pile in.
Bullion investors also took heart in news that top U.S.
hedge fund managers kept their big bets on the metal in the
second quarter when the price of gold rallied to an all-time
high.
Gold prices rose in tandem with a near 2 percent Wall
Street rally after data for July showed new home construction
rose and producer prices climbed for the first time in four
months. The metal also benefited as the dollar slipped on
better data. []
Gold, which had traded in a broad range for two months, has
been in rally mode on worries about a double-dip recession
after a flurry of weak economic data and the Federal Reserve's
downgrade of its economic outlook.
"We think it's a good sign that the market has been able to
recover from a bit of weakness in June and July when the
technical picture didn't look so good," Credit Suisse analyst
Tobias Merath said.
"The longer term outlook is fairly encouraging with dollar
weakness and more importantly after the U.S. Federal Reserve
meeting, bond yields dropped. This is positive as it reduces
the opportunity cost of holding gold," he added.
Spot gold <XAU=> hit $1,228.45 -- its highest level since
July 1 -- and was at $1,225 an ounce at 2:01 p.m. EDT (1801
GMT), against $1,222.85 late in New York on Monday.
U.S. gold futures for December delivery <GCZ0> settled up
$2.10 at $1,228.30 an ounce.
The metal benefited as the euro climbed against the U.S.
dollar and rose from a seven-week low against the yen, as
strong demand at Irish and Spanish bond auctions alleviated
concerns about heavily indebted euro zone countries. []
But the euro's initial rally fizzled and it struggled to
hold above $1.29 on uneasiness about the economic outlook, with
a key German survey sparking concerns about whether Europe's
largest economy can sustain a solid recovery. []
"People are worried about the pace of recovery,
particularly after some quite weak data out of the United
States and Japan recently," said Daniel Smith, an analyst at
Standard Chartered Bank.
"At the moment it looks like the market is breaking down
that overhead resistance and we're likely to move up to $1,250
as the next target," he added.
Earlier this week, data showed that growth in Japan's
economy slowed to a crawl in the second quarter and analysts
see more weakness ahead. []
FUND INTEREST STRONG
Major fund interest in gold remained steadfast in the
second quarter when gold prices rose nearly 12 percent to a
record high of $1,264.90 an ounce on June 21.
Top U.S. hedge fund managers' positions in SPDR Gold Shares
<GLD> showed a broad increase during the quarter.
[]
John Paulson's Paulson & Co. Inc featuring SPDR Gold Trust
<GLD> and Anglogold Ashanti <ANGJ.J> showed no change on the
quarter ending June 30. []
Similarly, billionaire investor George Soros stuck with his
big bet on gold. The fund firm said it owned 5.24 million
shares of the SPDR Gold Trust worth $638 million as of June 30.
[].
Dealers in Asia reported buying from investors and selling
from jewelry makers. There was soft physical buying from top
consumer India as demand is set to pick up for the busy
festival season, starting with Raksha Bandhan on Aug. 24 and
extending until Dhanteras in November.
Among other precious metals, silver <XAG=> was at $18.53 an
ounce versus $18.35.
Silver markets largely ignored supply issues as Bolivian
protesters ended more than two weeks of demonstrations on
Monday that disrupted operations at two of the world's top
silver deposits. []
Platinum <XPT=> was at $1,538.50 an ounce versus $1,529.00
and palladium <XPD=> at $493.10 against $480.50.
Prices at 2:15 p.m. EDT (1815 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCZ0> 1228.30 2.10 0.2% 12.1%
US silver <SIU0> 18.595 0.168 0.0% 10.4%
US platinum <PLV0> 1546.60 9.30 0.6% 5.1%
US palladium <PAU0> 497.30 11.55 2.4% 21.6%
Gold <XAU=> 1224.70 1.85 0.2% 11.7%
Silver <XAG=> 18.54 0.19 1.0% 10.1%
Platinum <XPT=> 1538.50 9.50 0.6% 5.0%
Palladium <XPD=> 493.10 12.60 2.6% 21.6%
Gold Fix <XAUFIX=> 1226.00 -0.25 0.0% 11.1%
Silver Fix <XAGFIX=> 18.54 34.00 1.9% 9.1%
Platinum Fix <XPTFIX=> 1541.00 3.00 0.2% 5.1%
Palladium Fix <XPDFIX=> 494.00 4.00 0.8% 22.9%
(Additional reporting by Veronica Brown in London; editing by
Jim Marshall)
