Gold steadies ahead of U.S. sales data

By Clara Denina

LONDON (Reuters) - Gold steadied on Friday, as the dollar flattened ahead of U.S. retail sales data that will help give clues on the possibility of a rate hike by the U.S. Federal Reserve this year.

Spot gold was up 0.1 percent at $1,339.90 an ounce by 1205 GMT, while U.S. gold slipped 0.4 percent to $1,345.10 an ounce.

"A fall below $1,330 would be a bearish signal for gold but there are not many reasons to be strongly positive in the short term, with the Fed rate hike dilemma still ongoing," ActivTrades chief analyst Carlo Alberto De Casa said.

San Francisco Fed President John Williams said on Thursday a U.S. interest rate increase this year was still a real possibility as inflation pressures grow.

Investors will monitor U.S. retail sales data, due at 1230 GMT, after data on Thursday showed the U.S. labour market was firming.

The Fed is likely to raise interest rates in December, after the Nov. 8 presidential election, according to a Reuters poll.

Gold is highly sensitive to rising U.S. interest rates, as the opportunity cost of holding the non-yielding asset increases while boosting the dollar, in which it is priced.

Higher global stocks were also curbing gold's appeal, often seen as a safer investment that people warm to in times of financial troubles.

Holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, fell 0.03 percent to 972.32 tonnes on Thursday.

Platinum was down 0.1 percent at $1,136.30 an ounce, after falling 3 percent in the previous session.

Palladium rose 0.5 percent to $692.40 and was set to finish the week with a modest loss. The metal had a rollercoaster week, hitting a 14-month high on Wednesday at $746.10 and posting the biggest one-day rally in more than five months, before tumbling 5 percent on Thursday.

"A further move lower in the platinum group metals could trigger a move below $1,330 for gold in the next few days," MKS Pamp said in a note.

Spot silver fell 0.3 percent to $19.88 an ounce.

(Additional reporting By Nallur Sethuraman in Bengaluru; Editing by William Hardy and David Evans)