Gold near three-and-a-half-month high on bets Fed to delay rate hike

SINGAPORE (Reuters) - Gold held near a 3-1/2-month high on Thursday as sluggish economic data from China and the United States stoked speculation the Federal Reserve will not raise rates this year.

FUNDAMENTALS

* Spot gold was little changed at $1,185 an ounce by 0022 GMT following a four-day rally. The metal climbed to $1,190 on Tuesday, its highest since June 22.

* Data on Wednesday showed U.S. retail sales barely rose in September and producer prices recorded their biggest decline in eight months, indicating the economy was losing momentum amid slowing global growth.

* Earlier in the day, China data showed consumer inflation cooled more than expected in September while producer prices extended their slide to a 43rd straight month, adding to concerns about deflationary pressures in the world's second-largest economy.

* Investors believe the weakening backdrop in the U.S. and elsewhere may cause Fed policymakers to delay the first rate increase in nearly a decade, earlier expected late in 2015.

* Gold is a non-yielding asset and tends to benefit from ultra-low rates.

* It also benefited as the dollar on Wednesday slumped to its lowest since late August against a basket of major currencies. A weaker dollar makes gold cheaper for holders of other currencies.

* Elsewhere, Elliott Management Chief Executive Paul Singer said on Wednesday every institutional portfolio should be 5-10 percent invested in gold to protect against zero interest rates that are degrading the value of paper currency.

* Among other precious metals, silver hit a 3-1/2-month high of $16.18 an ounce on Thursday before easing slightly. Platinum climbed to a five-week high of $999, before giving up gains to trade down 0.2 percent. Palladium edged up.

* For the top stories on metals and other news, click [TOP/MTL] or [GOL]

MARKET NEWS

* Global equity markets slid for a second day on Wednesday on expectations the Fed will not raise interest rates until next year. [MKTS/GLOB]

DATA AHEAD (GMT)

1230 U.S. Consumer prices Sep

1230 U.S. New York Fed manufacturing Oct

1230 U.S. Weekly jobless claims

1400 U.S. Philly Fed business index Oct

PRICES AT 0022 GMT

Metal Last Change Pct chg

Spot gold 1185 0.19 0.02

Spot silver 16.08 -0.04 -0.25

Spot platinum 993.9 -2.1 -0.21

Spot palladium 699.25 1.75 0.25

Comex gold 1184.9 5.1 0.43

Comex silver 16.11 -0.007 -0.04

COMEX gold and silver contracts show the

most active months

(Reporting by A. Ananthalakshmi; Editing by Michael Perry)