[NEW YORK] Gold prices fell in volatile trading on Friday as safe-haven demand dwindled after stocks in major markets largely recovered from a sell-off on easing concerns about Deutsche Bank.
Spot gold was down 0.3 per cent at US$1,316.32 per ounce by 2:48pm EDT (1848 GMT). US gold futures settled down up 0.7 per cent at US$1,317.10 an ounce.
AFP reported that Deutsche Bank, Germany's largest lender, was close to reaching a US$5.4 billion settlement with US authorities over charges that it had mis-sold mortgage-backed securities. That was far less than the US$14 billion previously demanded by the US Department of Justice, assuaging some concerns about the bank's stability.
A slump in Deutsche Bank's already battered stock had sent Europe into a fresh tailspin early on Friday and left world equity markets sliding toward their worst week in three months.
Safe-haven demand had supported bullion until the market turned its attention to US economic data.
The Commerce Department said on Friday that US consumer spending fell in August for the first time in seven months while inflation showed signs of accelerating, mixed signals that could keep the Fed cautious about raising interest rates.
Analysts polled by Reuters had expected a 0.1 per cent gain in consumer spending, which accounts for more than two-thirds of US economic activity.
"We got a little bit of a pop from Deutsche Bank but I don't think that is enough to give this market a much needed lift," said Eli Tesfaye, senior market strategist for brokerage RJO Futures in Chicago.
Dallas Federal Reserve Bank President Robert Kaplan said on Friday that while he has scoured the US economic data, he saw no evidence of overheating, so the central bank could continue to be patient in raising interest rates.
Gold is highly sensitive to rising US interest rates, as they increase the opportunity cost of holding non-yielding bullion, while boosting the US dollar and making commodities more expensive for non-US firms.
The US dollar index steadied to trade largely unchanged on the day after a choppy session.
Gold is up more nearly one per cent for the month, partly because of the weaker US dollar after the Fed chose not to raise interest rates at last week's policy-setting meeting.
For the quarter, gold is down marginally as the metal fell more than 3 per cent in August as brokers said flight-to-safety type of trading was not prevalent.
Spot silver was up 0.26 per cent at US$19.14 an ounce, while platinum fell 0.23 per cent to US$1,024.3. Palladium rose 1.26 per cent to US$721 on Friday and was up 21 per cent for the quarter, its biggest gain since late 2010.