* Gold retreats on dollar rise, no details from Bernanke
* Bullion weakens on mixed market signals outside of gold
* Coming up: U.S. September industrial output due Monday
(Recasts, adds comments, updates prices to market close)
By Frank Tang
NEW YORK, Oct 15 (Reuters) - Gold fell on Friday, snapping
a two-day record-setting rally, as the dollar rose and Fed
Chairman Ben Bernanke offered few new details on further
economic stimulus which prompted investors to take profits.
In a day of volatile trade and a host of mixed market
signals, bullion is still on track to end higher for an 11th
straight week, driven by a hardening view that the Fed will
resume buying government debt to stimulate the economy.
On Friday, Bernanke delivered his most explicit signal yet
that the U.S. central bank is likely to use easier monetary
policy as soon as its next meeting in November. But he failed
to offer the details that some gold investors are craving to
sustain the rally.
"The question is for how much longer the market is prepared
to run just on the quantitative easing story. I think the
market at these levels wants to see the facts before committing
additional capital to the upside," said Saxo Bank senior
manager Ole Hansen.
Gold rose to within two dollars of Thursday's all-time high
at $1,387.10 an ounce on a knee-jerk rally immediately
following Bernanke's remarks, which initially hit the dollar.
But the metal later weakened as the dollar rebounded
sharply from a more than eight-month low versus the euro as
traders said the greenback's recent declines were overdone.
[]
Spot gold <XAU=> was trading down 0.7 percent at $1,366.50
an ounce at 3:35 p.m. EDT (1935 GMT).
U.S. gold futures for December delivery <GCZ0> settled down
$5.60 at $1,372. COMEX gold volume was heavy during Friday's
correction at about 190,000 lots, 34 percent above its 30-day
average.
Gold investors opted to lock in profits ahead of the
weekend on a day when financial markets were driven by myriad
diverse factors.
U.S. Treasury bonds fell as traders bet on simmering
inflation after Bernanke's speech and weak consumer price data
lent pressure. Wall Street slid as bank shares sank on concerns
about the widening foreclosure crisis. [] []
[]
Bill O'Neill, a partner at commodities firm LOGIC Advisors,
said gold's resilience as the dollar bounced sharply showed
strong underlying safe-haven demand related to the foreclosure
woes.
"There is a wall of fear that gold could face a huge
correction, and that is helping the market because it keeps
enough selling in there so the market moves up in an orderly
way," he said.
Gold has climbed some 25 percent this year as the prospect
of further quantitative easing in the United States undermined
the dollar and prompted investors to buy the precious metal as
a hedge against currency depreciation.
In a highly anticipated speech Friday, Bernanke said there
was a case for further monetary easing given high unemployment
and low inflation, but he offered no details on the central
bank's next step. []
However, Bernanke said Fed policymakers were still weighing
how aggressive they should be if they decide to pursue a
further round of asset buying, or quantitative easing, to push
borrowing costs lower.
Stronger-than-expected September U.S. retail sales and
manufacturing activity in New York State on Friday reduced
investor anxiety somewhat and triggered profit-taking in gold
which is viewed as a safe haven investment, analysts said.
CURRENCY WAR
Gold benefited as an alternative reserve currency as
countries raced to adopt easier monetary policy and to
depreciate their own currencies to boost growth.
"Politicans are likely to continue with the easing route,
which is to continue printing money, allowing inflation to rise
and their currencies to devalue against others. We see now the
so-called currency war increasing in intensity between the
major economic powers," said Angelos Damaskos, a fund manager
and principal adviser of Sector Investment Managers.
This was likely to lead to an increasing tendency among
investors and currency holders to diversify into gold, he
said.
Among other precious metals, silver <XAG=> fell 1.5 percent
to $24.25, platinum <XPT=> slipped 1 percent to $1,688 an ounce
and palladium <XPD=> was trading down 1.7 percent at $587.50 an
ounce.
Prices at 3:36 p.m. EDT (1936 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCZ0> 1372.00 -5.60 -0.4% 25.2%
US silver <SIZ0> 24.288 -0.147 0.0% 44.2%
US platinum <PLF1> 1695.40 -17.20 -1.0% 15.3%
US palladium <PAZ0> 589.20 -12.35 -2.1% 44.1%
Gold <XAU=> 1366.60 -10.15 -0.7% 24.6%
Silver <XAG=> 24.24 -0.37 -1.5% 43.9%
Platinum <XPT=> 1688.00 -16.15 -0.9% 15.2%
Palladium <XPD=> 587.50 -9.95 -1.7% 44.9%
Gold Fix <XAUFIX=> 1367.50 -9.75 -0.7% 23.9%
Silver Fix <XAGFIX=> 24.42 -7.00 -0.3% 43.7%
Platinum Fix <XPTFIX=> 1691.00 10.00 0.6% 15.3%
Palladium Fix <XPDFIX=> 591.00 6.00 1.0% 47.0%
(Additional reporting by Jan Harvey in London; editing by Jim
Marshall)
