PRECIOUS-Gold heads for 2nd monthly rise; but Syria, stimulus concerns linger

                            Gold held steady on Friday as the probability of an immediate U.S. strike on Syria faded, and strong U.S. data rekindled fears of an imminent scale-back of the Federal Reserve's stimulus measures. The metal is headed for its second straight monthly gain, helped largely by short-covering and technical buying that pushed it above the key $1,400 level this week. At its 3-1/2 month high of $1,433.31 hit on Wednesday, gold had gained 21 percent from the three-year low of $1,180.71 marked on June 28, but it is now struggling to hold at those levels amid a slowdown in physical demand and strong economic data. "Looks like the market is running out of steam at these levels," said one Singapore-based gold trader. "If it cannot hold above $1,400 today, it will surely see a sharp drop." "We have seen quite a sharp slowdown in physical buying." Spot gold had risen 0.1 percent to $1,409.66 an ounce U.S. gross domestic product grew at a 2.5 percent annual rate in the April-June period, more than double the pace clocked in the prior three months. The number of Americans filing new claims for jobless benefits fell last week, a potential sign of faster hiring in August. Strong U.S. data bolsters the case for the tapering of the Fed's massive stimulus that pushed gold to above $1,900 an ounce in 2011. U.S. officials conceded on Thursday they lacked conclusive evidence that Syrian President Bashar al-Assad personally ordered last week's poison gas attack, and some allies have warned that military action without U.N. Security Council authorization risks making the situation worse. As geopolitical tensions in Syria mounted, gold's safehaven appeal had increased.

PHYSICAL SLOWDOWN Gold prices above $1,400 for the first time in more than two months have deterred buyers who had splurged on jewellery, bars and coins earlier this year. In Hong Kong - the key gold supplier to China - gold kilo bar premiums declined to $2.50 an ounce from $5 two weeks ago. Tokyo premiums fell to 50 cents from $1.50, while those in Singapore dropped to $1.50. Dealers said there has been a lot of selling in the physical markets in Asia as consumers look to profit from the higher prices.

Precious metals prices 0407 GMT

Metal Last Change Pct chg YTD pct chg Volume Spot Gold 1409.66 2.02 +0.14 -15.82 Spot Silver 23.90 0.07 +0.29 -21.07 Spot Platinum 1514.74 1.04 +0.07 -1.32 Spot Palladium 735.50 1.52 +0.21 6.29 COMEX GOLD DEC3 1409.90 -3.00 -0.21 -15.87 11665 COMEX SILVER SEP3 23.92 -0.17 -0.71 -21.07 159 Euro/Dollar 1.3240 Dollar/Yen 98.18

COMEX gold and silver contracts show the most active months