Gold flat as geopolitical tensions ease; focus on future Fed path

Gold prices were flat on Thursday as safe-haven demand from latest geopolitical concerns faded, while hopes that the U.S. Federal Reserve would be less aggressive on rate hikes over coming months underpinned the market.

FUNDAMENTALS

* Spot gold was mostly unchanged at $1,773.40 per ounce, as of 0103 GMT.


* U.S. gold futures were little changed at $1,776.20 per ounce.

* Gold prices hit a three-month peak of $1,786.35 per ounce on Tuesday, after news that Russian missiles killed two people in Poland near the Ukraine border.

* However, Poland's president on Wednesday said a missile that hit his country was probably a stray Ukrainian defense projectile, dispelling fears that it came from Russia and could widen the Ukraine crisis.

* Focus remained on Fed's interest rate strategy, with traders pricing in a 93% probability of a 50 basis-point of rate hike at the U.S. central bank's December meeting.

* San Francisco Fed President Mary Daly told CNBC it's reasonable for the Fed to raise its policy rate to a 4.75%-5.25% range by early next year, and that pausing rate hikes is not part of the discussion.

* Rising interest rates tend to dull bullion's appeal as the metal pays no interest.

* Data showed U.S. retail sales increased more than expected in October, boosted by purchases of motor vehicles and a range of other goods, suggesting that consumer spending could help to underpin the economy in the fourth quarter.

* U.S. 10-year Treasury yields were hovering near a one-month low, reducing the opportunity cost of holding non-interest bearing gold.

* Spot silver eased 0.3% to $21.41 per ounce. Platinum fell 0.3% to $1,003.4 and palladium was down 0.2% at $2,067.10.

DATA/EVENTS (GMT)

0030 Australia Employment Oct

0030 Australia Unemployment Rate Oct

1000 EU HICP Final MM, YY Oct

1330 US Housing Starts Number Oct

1330 US Initial Jobless Clm Weekly

1330 US Philly Fed Business Indx Nov