* Dollar recovers as market awaits details of possible QE
* Goldman raises 12-month forecast to $1,650/oz vs $1,365
* Biggest gold ETF sees further outflow in New York
* Coming up: Minutes of FOMC meeting due Tuesday 1800 GMT
(Recasts, updates comment, market activity, adds second
byline/dateline)
By Frank Tang and Amanda Cooper
NEW YORK/LONDON, Oct 12 (Reuters) - Gold fell on Tuesday as
uncertainty over what the Federal Reserve will do to stimulate
economic growth prompted investors to take profits.
Top Fed officials downplayed the need for the U.S. central
bank to resume buying government debt again to stimulate the
economy, ahead of the minutes of the Fed's most recent policy
meeting which will shed light on the likelihood and scope of
renewed quantitative easing measures.
"Gold is cooling off a little bit based on the pullback of
the euro, and the fact that there has been noise from Fed
officials that we should not assume that there is going to be
massive additional quantitative easing," said Donald Selkin,
chief market strategist of National Securities Corp.
Kansas City Federal Reserve President Thomas Hoenig, who
all year has steadfastly opposed the Fed's super-easy monetary
policy, fleshed out his stance against further easing on
Tuesday, saying it would do little to aid the recovery and
could spark inflation. []
St. Louis Fed President James Bullard said on Friday the
Fed faced a difficult decision at next month's policy meeting
on whether to offer further stimulus to a U.S. economy that is
still growing but only slowly.
Spot gold <XAU=> was trading down 0.5 percent at $1,346.50
an ounce at 12:48 p.m. EDT (1648 GMT). U.S. gold futures for
December delivery <GCZ0> fell $6.90 an ounce to $1,347.50.
Bullion has not set an all-time high in three sessions
after an 11-session run in which it hit nine record highs.
Investors took profits on Tuesday after gold rallied to a
record $1,364.60 an ounce last week as expectations the Federal
Reserve would move toward further quantitative easing to
bolster the flagging U.S. economy undermined the dollar.
The dollar rose against the euro and a basket of major
currencies on Tuesday, extending the previous session's gains
as investors worried the U.S. currency had fallen too abruptly.
[]
Analysts said the currency market has already priced in
aggressive U.S. monetary easing and that the dollar is likely
to rebound if the Fed does not press ahead with such a policy
at its Nov. 21 meeting.
"Given that the U.S. dollar has declined 10 percent against
the euro since the September lows, one has to wonder how much
quantitative easing may already be priced in," CMC Markets
analyst Michael Hewson said in a note."
(Graphic on rise in global currency tensions:
http://link.reuters.com/jec96p )
GOLDMAN RAISES FORECAST
In spite of Tuesday's decline, many analysts expect gold
could rally further despite interim pullbacks.
Investment bank Goldman Sachs said a period of slowing U.S.
growth coupled with a fresh round of quantitative easing had
prompted it to raise its 12-month gold forecast to $1,650 an
ounce from around $1,365 previously.
Investment interest in gold-backed exchange-traded funds
was soft, meanwhile, with holdings of the world's largest, New
York's SPDR Gold Trust <GLD>, declining by just under 1 tonne
on Monday to 1,287.327 tonnes. []
The trust's holdings have dropped nearly 7.5 tonnes so far
this month, despite a 2.6 percent rise in gold prices.
"It is remarkable that these outflows have not put that
much pressure on gold prices so far," said Commerzbank in a
note. "Physical buying interest in Asia ahead of the major
religious festivals is apparently forming a counterweight."
Silver <XAG=> slipped 0.7 percent to $23.12 an ounce, while
platinum <XPT=> eased 0.3 percent at $1,677.50 an ounce.
Palladium <XPD=> fell 1.1 percent to $579.
The platinum-palladium ratio -- the number of ounces of
palladium needed to buy an ounce of platinum -- fell to its
lowest level since early 2004 this week at just under 2.9.
Prices at 12:57 p.m. EDT (1657 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCZ0> 1347.60 -6.80 -0.5% 22.9%
US silver <SIZ0> 23.165 -0.184 -0.8% 37.5%
US platinum <PLF1> 1682.20 -8.60 -0.5% 14.4%
US palladium <PAZ0> 580.00 -8.75 -1.5% 41.9%
Gold <XAU=> 1346.70 -6.25 -0.5% 22.8%
Silver <XAG=> 23.15 -0.14 -0.6% 37.5%
Platinum <XPT=> 1677.50 -5.65 -0.3% 14.5%
Palladium <XPD=> 579.00 -6.45 -1.1% 42.8%
Gold Fix <XAUFIX=> 1348.50 5.00 0.4% 22.1%
Silver Fix <XAGFIX=> 23.03 -28.00 -1.2% 35.6%
Platinum Fix <XPTFIX=> 1685.50 9.50 0.6% 15.0%
Palladium Fix <XPDFIX=> 585.00 5.00 0.9% 45.5%
(Additional reporting by Jan Harvey in London; editing by Jim
Marshall)
