* Markets expected to be quiet during Chinese holiday
* Federal Reserve policy meeting on Sept. 20-21
* GRAPHIC-2016 asset returns:reut.rs/1WAiOSC
(New throughout, updates prices, market activity and comments)
By Devika Krishna Kumar and Clara Denina
NEW YORK/LONDON, Sept 15 Gold slid on Thursday
to a two-week low after a mixed bag of U.S. economic data
prompted selling ahead of next week's U.S. Federal Reserve
Spot gold fell as much as 1 percent to $1,309.25 an
ounce and was down 0.6 percent at $1,314.47 by 5:05 p.m. EDT
U.S. economic reports showed retail sales fell more than
expected last month, while the number of Americans filing for
unemployment benefits rose less than expected last week.
The reports made investors less confident that Fed policy
makers will raise U.S. interest rates when they meet on Sept.
20-21, but many say a rate hike in December is possible.
ETF Securities analyst Martin Arnold called the Fed's
reluctance to increase rates supportive for gold, but even a
modest hike in December will weaken gold prices in the short
U.S. interest rate futures indicate expectations of an
increase next week remain low, but the dollar could benefit from
anything in the Fed's statement that hints at a hike before the
end of the year.
Eli Tesfaye, senior market strategist for RJO Futures in
Chicago, said he did not expect gold to fall much further
because Indian wedding season and other seasonal factors will
support physical demand for gold.
But Commerzbank analysts said in a note that "Gold prices
will remain under pressure in the short term, partly because
investor expectations are already very high and partly because
financial market participants are not feeling any particular
fear at present, which is why demand for gold as a 'safe haven'
is tending to decline."
The dollar was up 0.1 percent against a basket of six major
currencies. A stronger dollar makes gold more
expensive for holders of other currencies.
The dollar had risen against the yen in morning trading on
expectations the BOJ could ramp up monetary stimulus.
Spot gold looks neutral in a range of $1,319-$1,330 per
ounce and an escape could point a direction, Reuters technical
analyst Wang Tao said.
With China's markets closed through Sunday for the
Mid-Autumn Festival, physical activity in the world's biggest
gold consumer is expected to be quiet.
India's gold imports fell for a seventh straight month in
August to $1.1 billion as sluggish demand and record high
discounts prompted banks and refineries to reduce overseas
purchases of bullion.
Among other precious metals, spot silver fell 0.1
percent to $18.94 an ounce. Platinum was down 0.1 percent
at $1,031.1 and palladium rose 0.1 percent to $654.5.
(Additional reporting by Swati Verma in Bengaluru; Editing by
David Goodman and David Gregorio)