US MIDDAY: gold down

Gold prices fell about 0.5 percent on Tuesday as healthy US retail sales data prompted bullion investors to scale back their bets based on expectations of imminent stimulus from the Federal Reserve. Platinum group metal prices rose on supply worries due to a work stoppage at one of the top platinum producers in South Africa. Better economic sentiment amid gains in US equities also underpinned buying in PGMs, used by the auto industry.
Bullion dropped as much as 1 percent after data showed US retail sales rose in July for the first time in four months. Demand climbed broadly for everything from cars to electronics, a sign consumers could drive faster economic growth in the third quarter.
"Better economic figures may make the Fed postpone or do away with additional stimulus. Technically, we failed to break above $1,625 decisively, and profit-taking is probable as the $1,600 area may give way to $1,575 support," said George Gero, vice president of RBC Capital Markets.
Spot gold was down 0.4 percent at $1,603 an ounce by 12:30 p.m. EDT (1630 GMT), having hit a low at $1,594.10. US COMEX gold futures for December delivery fell $7.10 an ounce to $1,605.50. Silver was essentially flat at $27.79 an ounce. Trading volume was above 100,000 lots at noon EDT, and looked set to reach the highest level in about two weeks. Some traders said turnover was unusually high in the minutes immediately after the release of the US retail sales data, as gold prices had dropped around $20 when the euro also tumbled.
Positive signals on the US economy could cut the chances of another round of gold-friendly stimulus measures such as quantitative easing - printing money to buy bonds. Expectations of such measures have supported prices in recent months. "Whether the US retail numbers diminish the chance of QE3 could be the short-term focus now, and has the potential to create a bit of headwind," said Ole Hansen, vice president at Saxo Bank.
Platinum group metals outperformed gold after the world's third-largest platinum producer, Lonmin, shut its South African operations following violence caused by a feud between rival unions. Nine people were killed at its main mine. South Africa produces about three-quarters of the world's platinum. Platinum rose 1.2 percent to $1,396.24 an ounce and spot palladium gained 1.2 percent to $576.22 an ounce. Platinum's unusual discount to gold held above $200 an ounce as demand worries continued. Platinum is down nearly 1 percent this month and off almost 20 percent from a February high.