* Gold ends flat after rally on Israel-Iran tension
* Protests across Arab world could spur gold buying
* Coming up: U.S. consumer prices due on Thursday
(Recasts, adds comments, updates prices, new byline and
dateline, previously LONDON)
By Frank Tang
NEW YORK, Feb 16 (Reuters) - Gold ended flat on Wednesday
following a brief rally to one-month highs after Israel said
two Iranian warships planned to sail through the Suez canal en
route to Syria, calling the move a "provocation".
Israel's comment gave a further safe-haven boost to gold,
already underpinned by geopolitical tensions as anti-government
protests inspired by revolts that toppled rulers in Tunisia and
Egypt gain pace around the Arab world.
"The gold market is starting to pay more attention to the
external geopolitical events rather than the positive economic
data, which would have kept the market sharply lower," said
Frank McGhee, head precious metals trader at Integrated
Brokerage Service.
Analysts said technical buying continued to support bullion
after it breached key resistance at its 50-day and 100-day
moving averages on Tuesday.
Spot gold <XAU=> hit a one-month high of $1,381.84 an ounce
after Israel's announcement, before trimming gains. It was up
0.1 percent at $1,374.20 by 2:21 p.m. EST (1921 GMT).
The U.S. gold contract for April delivery <GCJ1> settled up
$1 at $1,375.10 an ounce, with volume about 40 percent below
its 30-day moving average. That was in line with recent
lower-than-normal turnover, a possible sign of dwindling
interest.
Bullion's appeal as a safe-haven investment could increase
due to heightened tensions in the Middle East and North
Africa.
The Iranian naval contingent described by Israeli Foreign
Minister Avigdor Lieberman would pose no significant military
threat to Israel but could spell the closest-ever encounter by
the forces of the two old foes, who are geographically distant.
[]
Meanwhile, anti-government protests were reported in
tightly controlled oil producer Libya, sandwiched between Egypt
and Tunisia, while new protests erupted in Bahrain, Yemen and
Iran.
Gold remained in a relatively narrow trading range as the
Middle Eastern tensions and concerns over the inflation outlook
underpinned prices, while a bigger appetite for higher-yielding
assets curbed fresh buying interest.
"There are a number of conflicting signals for what is
usually driving gold," said Peter Fertig, a consultant at
Quantitative Commodity Research. "This is currently leading to
a bit more sideways trading."
U.S. data showed housing starts and the producer price
index for January came in above expectations.
Core wholesale prices in the United States rose at their
fastest rate in more than two years, raising some concerns
about inflation, but economists said the recovery was too weak
for a big spike in consumer prices.
Gold also benefited as the dollar slumped after the Israeli
foreign minister's comments. A potential conflict in the Middle
East could hurt the U.S. economy, weighing on the greenback.
ETF OUTFLOWS STEADY
Gold prices are taking some support from a reduction in
outflows from physically backed exchange-traded funds, whose
gold holdings fell significantly in January.
Holdings of the largest, New York's SPDR Gold Trust <GLD>,
eased to a nine-month low on Tuesday, but outflows this month
so far are well below January's levels. []
Meanwhile, an Industrial and Commercial Bank of China
executive said Chinese demand for physical gold and
gold-related investments was growing at an "explosive" pace and
set to remain robust amid inflation concerns. []
Among other precious metals, silver <XAG=> eased 0.3
percent to $30.66 an ounce. Platinum <XPT=> slipped 0.1 percent
to $1,824.50, while palladium <XPD=> inched up 0.1 percent to
$835.72, having touched a 10-year high at $847 on Tuesday.
Prices at 2:23 p.m. EST (1923 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCJ1> 1375.10 1.00 0.1% -3.3%
US silver <SIH1> 30.629 -0.067 0.0% -1.0%
US platinum <PLJ1> 1834.30 2.70 0.1% 3.2%
US palladium <PAH1> 838.35 -1.55 -0.2% 4.4%
Gold <XAU=> 1374.10 1.15 0.1% -3.2%
Silver <XAG=> 30.66 -0.10 -0.3% -0.6%
Platinum <XPT=> 1824.50 -2.74 -0.1% 3.2%
Palladium <XPD=> 835.72 0.72 0.1% 4.5%
Gold Fix <XAUFIX=> 1371.25 -3.25 -0.2% -2.8%
Silver Fix <XAGFIX=> 30.77 5.00 0.2% 0.5%
Platinum Fix <XPTFIX=> 1828.00 10.00 0.5% 5.6%
Palladium Fix <XPDFIX=> 840.00 2.00 0.2% 6.2%
(Additional reporting by Jan Harvey, Sue Thomas and Melanie
Burton in London; Editing by Dale Hudson)
