PRECIOUS-Gold off highs as sellers unwind risk play

                                
 * European bank sector concern, risk aversion recedes
                                
 * Gold pulls off levels that approached record highs
                                
 * Some traders grab profits as reach for peaks fails
                                
 * Silver climbs to fresh 2-1/2-year high
 (Updates with late New York prices, comment; changes dateline,
byline; rewrites throughout)
                                
 By Carole Vaporean and Amanda Cooper
                                
 NEW YORK/LONDON, Sept 8 (Reuters) - Gold was little changed
late on Wednesday after some investors unwound risk-aversion
plays that had sent prices near record highs early, opting
instead for rallying assets such as oil and industrial metals.
                                
 Spot gold <XAU=> was bid at $1,256.05 an ounce by 3:28
p.m. EDT (1928 GMT) against $1,253.10 late in New York on
Tuesday. It hit a session high of $1,262.25, near the record
peak of $1,264.90 set on June 21.
                                
 U.S. gold futures for December delivery <GCZ0> slipped
$1.80 to end at $1,257.50 an ounce, after reaching their
highest since June 28 at $1,264.70.
                                
 The all-time high on the December futures chart is
$1,270.60 per ounce, but COMEX spot futures' record lies at
$1,264.80, hit on June 21.
                                
 Silver <XAG=> reached a session high of $20.14 an ounce, a
fresh 2-1/2-year peak, but was bid at $19.94 in late New York
trade against $19.83 on Tuesday.
                                
 Silver had been bid up with other industrial metals,
including the platinum group.
                                
 Though short-term investors sold gold in afternoon trade,
sentiment towards the yellow metal remains mixed. It has risen
about 15 percent in 2010, marking 10 years of continuous gains,
and looks set for its third all-time high this year.
                                
 When gold failed to reach new peaks on Wednesday, some
short-term traders took profits on the run-up that had begun in
the previous session as concerns about some European banks
returned.
                                
 By midday some players were selling gold in favor of assets
such as oil, industrial metals and U.S. equities, which resumed
their rally of late last week that followed a U.S. employment
report showing unexpected bright spots.
                                
 Some investors remained sidelined, waiting for the Federal
Reserve's so-called Beige Book, which ultimately had little
impact on after-hours business.
                                
 The Fed said it observed "widespread signs" that
economic growth had eased in the six weeks through August,
in a report suggesting the U.S. recovery was faltering
along the East Coast and the Midwest. [nWAL8KE6JM]
                                
 The Beige Book, which gives an anecdotal overview of
economic progress from every region in the United States,
said modest growth continued in the five western districts.
At the same time, it reported growth was mixed or had slowed in
New York, Philadelphia, Richmond, Atlanta and Chicago.
                                
 "Looking at some of the headlines, it's not all that
encouraging. But then, it looks like more of the same. We've
already heard most of it from (Fed Chairman Ben) Bernanke on
several occasions," said Tom Pawlicki, precious metals analyst
at MF GLOBAL in Chicago.
                                
 STALLING
                                
 Gold has hit tough resistance just below its record high,
but analysts say they are confident in the metal's rise.
                                
 UBS strategist Edel Tully said she had upgraded her gold
price forecasts based on its traditional outperformance in
September, coupled with safe-haven demand emanating from a
focus on sovereign fiscal burdens.
                                
 "Given the range of factors conspiring to push gold higher
in September, we raise our one-month forecast to $1,300, from
$1,230 previously. We also lift our three-month target to
$1,300, from $1,200 previously," she wrote in a report.
                                
 Also supporting prices was news that China, the world's
biggest gold miner, had a fall in output in July. The country
is a major consumer of gold, and speculation its output may
fail to satisfy domestic demand is likely to underpin prices.
[ID:nTOE68706X]
                                
 Elsewhere, platinum <XPT=> pulled off highs to $1,557.00
an ounce against $1,553.03, and palladium <XPD=> was at
$525.00 against $520.85.
                                
 Prices at 2:27 p.m. EDT (1827 GMT)    
                                
                          LAST/      NET    PCT     YTD
                                
                          CLOSE      CHG    CHG     CHG
US gold         <GCZ0>     1257.50    -1.80  -0.1%   14.7%
US silver       <SIZ0>      19.978    0.095   0.0%   18.6%
US platinum     <PLV0>     1562.20     5.90   0.4%    6.2%
US palladium    <PAZ0>      525.50     3.90   0.7%   28.5%
Gold            <XAU=>     1255.90     2.80   0.2%   14.6%
Silver          <XAG=>       19.91     0.08   0.4%   18.2%
Platinum        <XPT=>     1557.00     3.97   0.3%    6.2%
Palladium       <XPD=>      525.00     3.65   0.7%   29.3%
Gold Fix        <XAUFIX=>  1255.00    -3.00  -0.2%   13.7%
Silver Fix      <XAGFIX=>    20.02    37.00   1.9%   17.8%
Platinum Fix    <XPTFIX=>  1555.00     1.00   0.1%    6.1%
Palladium Fix   <XPDFIX=>   523.00     1.00   0.2%   30.1%
 (Additional reporting by Jan Harvey; Editing by Dale Hudson