* Gold flattens after recent 1-1/2 month high
* May retrace to $1,211/oz - technicals []
(Updates prices)
By Veronica Brown and Rebekah Curtis
LONDON, Aug 18 (Reuters) - Gold eased on Wednesday as the
market consolidated a recent run to 1-1/2 month highs, with
prices seen trapped in relatively tight ranges over the rest of
this month, although a positive outlook stayed intact.
Spot gold stood at $1,219.00 per ounce by 1336 GMT, compared
with $1,222.90 late in New York on Tuesday. U.S. gold futures
for December delivery <GCZ0> fell $5.70 to $1,222.60 per ounce.
Prices had earlier firmed, taking direction from currency
moves, but the inverse correlation gold has most of the time
with the U.S. unit broke down in European afternoon trade.
The dollar was almost 0.2 percent lower against a basket of
major currencies <.DXY>.
"Gold may be trading range-bound until the end of August and
then the fourth quarter should be interesting for gold, we may
see the old highs again," said Afshin Nabavi, head of trading at
MKS Finance.
"All through the month of July and the beginning of August
we saw remarkable physical related buying, so that has put a
very good support on the market for the time being," he added.
"If the market does dip again we will see fresh interest coming
out of the physical market."
The market could remain broadly between $1,200 and $1,250
per ounce, having hit its highest since July 1 on Tuesday at
$1,228.45 per ounce.
In wider markets, world stocks dipped, dragged down by
losses in Europe. Shares of global miner BHP Billiton
<BHP.AX><BLT.L> remained in focus, falling on concerns that it
may have to overpay for fertiliser group Potash Corp. after the
Canadian company rejected an initial offer. []
NAGGING WORRIES
Asia-based dealers said a positive outlook for gold was
underpinned by a rise in ETF holdings and nagging worries about
the health of the global economy.
"I am also looking at gold to be supported above the $1,220
level. It would be underpinned by strong investment demand as we
see from the rise in holdings of the SPDR Gold Trust," said Ong
Yi Ling, an investment analyst at Phillip Futures in Singapore.
"I think it really demonstrates a strong investment interest
in gold that will continue, especially if we see people worried
about the economic recovery. It really depends on the kind of
economic data that is being printed."
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The world's largest gold-backed exchange-traded fund, SPDR
Gold Trust <GLD.P>, said its holdings rose to 1,294.604 tonnes
by Aug. 17 from 1,286.699 tonnes on Aug. 12. Holdings hit a
record at 1,320.436 tonnes on June 29. []
Fears about a double-dip recession after a flurry of weak
economic data and the Fed's downward reassessment of its U.S.
outlook lifted gold's appeal as an alternative investment.
In the latest economic data, producer prices increased in
July for the first time in four months, helping to allay
concerns about deflation, but housing starts rose at a weaker
rate than expected and permits fell to their lowest point in
more than a year. [] []
Gold demand in top consumer India is picking up for the busy
festival season, starting with Raksha Bandhan on Aug. 24, and
extending till Dhanteras in November, the single biggest
gold-buying day. A firmer rupee is also expected to offset gains
in global gold prices. []
Silver <XAG=> was at $18.17 per ounce compared with $18.47
late on Tuesday in New York. Platinum <XPT=> was quoted at
$1,523.00 from $1,538.50, while palladium <XPD=> was bid at
$484.00 from $493.50.
(Additional reporting by Lewa Pardomuan in Singapore;
editing by Sue Thomas and Alison Birrane)
