PRECIOUS-Gold eases from 4-1/2 month high, Fed eyed

* Gold on course for strongest weekly performance since June
* Spot gold may rise to $1,697/oz - technicals
* Coming up: U.S. durable goods orders, July; 1230 GMT

(Updates prices)
By Rujun Shen
SINGAPORE, Aug 24 (Reuters) - Gold eased from a 4-1/2 month
high on Friday but was still poised for its biggest weekly rise
in more than two months as investor expectations of imminent
bond buying by the U.S. Federal Reserve cooled slightly.
The latest U.S. data sent mixed messages to investors by
showing an improving manufacturing sector but a struggling
labour market, after minutes released this week from the most
recent Fed policy meeting expressed willingness to launch more
bond buying.
"Gold has already priced the expectation for QE3 (a third
round of quantitative easing), and short-covering related to the
minutes has also helped gold rally over the past few days," said
Dick Poon, manager of precious metals at Heraeus in Hong Kong.
Scrap selling improved, as did purchases by investors in the
physical market, after gold prices climbed for seven straight
sessions and broke above a range that had been in place since
May, he added.
Some analysts and traders questioned the necessity of QE3,
as well as its effectiveness if launched, echoing comments by
St. Louis Fed President James Bullard that the U.S. economic
outlook had brightened since the policy meeting.
"Stimulus is necessary given the messy economic conditions,
but the problem is that people have way too high expectations
for quantitative easing," said a Shanghai-based trader.
Spot gold eased 0.3 percent to $1,664.81 an ounce by
0618 GMT, on course for a 3.1-percent climb from a week earlier.
It hit a 4-1/2-month high of $1,674.80 on Thursday.
Some profit-taking ahead of the weekend also contributed to
the dip in prices, traders said.
The U.S. gold futures contract for December delivery
fell 0.3 percent to $1,667.60.
Technical analysis suggested spot gold could rally further
to $1,693 during the day, after clearing the $1,664 resistance
on Thursday, said Reuters market analyst Wang Tao.

Investors have been expecting bold action from Europe's
policy makers to boost risk appetite and in turn help gold,
which has traded largely in tandem with riskier assets since
late last year as a result of the tight liquidity conditions
caused by the deepening debt crisis.
Spain is negotiating with euro zone partners over terms for
aid to bring down its borrowing costs, though the country has
not made a final decision to request a bailout.
SPDR Gold Trust, the world's biggest gold-backed
exchange-traded fund, said its holdings had risen to a
4-1/2-month high of 1,286.621 tonnes by Aug. 23. Holdings of the
fund have increased by 34.6 tonnes so far this month, compared
with an outflow of more than 27 tonnes last month.

Spot silver lost 0.6 percent to $30.32 per ounce,
heading for a weekly rise of more than 8 percent, which would be
its largest since the end of last October.
Spot platinum edged down 0.2 percent to $1535.99 per
ounce, on course for a second straight week of gains.

Precious metals prices 0618 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1664.81 -5.23 -0.31 6.46
Spot Silver 30.32 -0.19 -0.62 9.50
Spot Platinum 1535.99 -2.41 -0.16 10.26
Spot Palladium 648.05 -1.55 -0.24 -0.68
COMEX GOLD DEC2 1667.60 -5.20 -0.31 6.43 13520
COMEX SILVER SEP2 30.30 -0.16 -0.51 8.54 3437
Euro/Dollar 1.2543
Dollar/Yen 78.60
COMEX gold and silver contracts show the most active months

(Editing by Daniel Magnowski)