PRECIOUS-Gold retreats on robust U.S. retail sales data, but holds at 14-month peak

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By Karthika Suresh Namboothiri

June 14 (Reuters) - Gold prices retreated on Friday asupbeat U.S. retail sales somewhat eased fears that the economywas slowing down in the second quarter.

Prices had jumped 1% earlier in the session on marketexpectations of at least two U.S. central bank rate cuts in2019.

Spot gold XAU= was up 0.4% at $1,347.01 per ounce as of10:28 a.m. EDT (1428 GMT). Prices rose to a high of $1,358.04,last touched on April 11, 2018. The metal was set to gain for afourth straight week, up 0.8%.

U.S. gold futures GCcv1 rose 0.5% to $1,350.80 per ounce.

"Because of growing fears of a recession every participantis wondering is it time when gold is going to break out of thisrange, and trade substantially higher," said Daniel Ghali,commodity strategist at TD Securities.

"At the same time expectations of a Fed cut are growing.Gold obviously performs well in that environment."

Robust U.S. retail sales in May suggested a pickup inconsumer spending that could ease fears the economy was slowingdown sharply in the second quarter. The data has "dispelled theneed for an immediate Fed cut. The market is just paring backits expectations a little bit," Ghali added. urn:newsml:reuters.com:*:nL2N23K178

Recent soft U.S. economic readings have boosted expectationsof a U.S. Federal Reserve interest rate cut. Policymakers arescheduled to meet June 18-19, with financial markets pricing inat least two rate cuts by year-end.

In addition to weighing on the dollar, lower interest ratesalso cut the opportunity cost of holding non-yielding bullion.

A China-U.S. trade war has threatened to escalate,potentially pushing the global economy into recession.

Trade tensions have also spurred concerns about China'seconomy, with industrial output growth unexpectedly slowing to amore than 17-year low and investment cooling. urn:newsml:reuters.com:*:nL4N23K0UKurn:newsml:reuters.com:*:nL4N23L1WS

"In people's minds there is a sense of a deeply darkeningmacroeconomic backdrop, in particular the likelihood that theU.S. will drop interest rates quite soon," said Ross Norman,chief executive officer at bullion dealer Sharps Pixley.

Among other precious metals, spot silver XAG= was up 0.6%to $14.98 per ounce, while platinum XPT= dipped 0.2 % to$809.10.

Palladium XPD= gained 0.9% to $1,457.60 per ounce, ontrack for its best week since September 2018. Prices were up fora seventh straight session.

Graphic-2019 asset returns:    http://tmsnrt.rs/2jvdmXl
(Reporting by Karthika Suresh Namboothiri and Eileen Soreng inBengaluru; Editing by Jeffrey Benkoe) ((karthikasuresh.namboothiri@thomsonreuters.com; +91 80 67490997 (If within U.S. call 651-848-5832); Reuters Messaging:karthikasuresh.namboothiri.thomsonreuters.com@reuters.net))

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