* Global gold demand falls to two-year low -WGC
* U.S. data paints mixed picture of economy
* Spot gold neutral in $1,589.69-$1,626.06/oz -technicals
* Coming Up: U.S. housing starts; 1230 GMT
(Adds detail, comment; updates prices)
By Rujun Shen
SINGAPORE, Aug 16 (Reuters) - Gold hovered above $1,600 an
ounce on Thursday as investors continued to hope central banks
would take further steps to boost the global economy, even as
recent U.S. data suggested the Federal Reserve may not need to
intervene for now.
The precious metal has been trapped in a $100-trading range
since mid-May, with a lack of clarity on possible steps from the
Fed keeping many traders on the sidelines, curbing bullion's
year-to-date gain at around 2 percent.
Global gold demand fell to its lowest in more than two years
in the second quarter as a drop in buying from major consumers
India and China outweighed a record quarter for central bank
purchases, the World Gold Council said.
Further monetary easing would boost interest in gold, seen
as an effective hedge against rampant cash-printing and
consequently, rising prices.
Wednesday's batch of U.S. data added to the uncertainty over
stimulus. While consumer inflation remained tepid, giving the
Fed room to ease policy further, improved home-builder sentiment
and industrial production led some economists to doubt the
necessity of another round of bond purchases.
"(Further Fed quantitative easing has) become unlikely in
the short term, as the string of negative economic surprises
seem to have come to an end," Credit Suisse analysts wrote in a
research note.
"What counts at the moment is the 'real' economy and while
certainly far from booming, this does not appear weak enough for
the Fed to act."
Spot gold was little changed at $1,602.34 an ounce by
0632 GMT, off a 1-1/2 week low of $1,589.69 hit in the previous
session.
U.S. gold futures for December delivery had also
barely moved at $1,605.10.
Later in the day, investors will seek trading cues from more
data, including U.S. housing starts and weekly jobless claims.
SPRING INTO ACTION?
Traders said the uncertainty on if and how central banks
will further ease monetary policy and concerns about the global
economy overall may keep sentiment in gold markets muted for
now.
"I don't see gold demand jumping any time soon because no
one knows how the euro zone is going to solve their debt
problem, and people are worried that China and India are both
slowing down," said Dick Poon, manager of precious metals at
Heraeus in Hong Kong.
Some traders expect market activity to pick up in September,
when many return from their summer holidays and the Fed's
policy-setting panel is scheduled to meet.
"We hope the market will spring into action next month, as
fabrication demand rises ahead of the Christmas and Lunar New
Year holidays," said a Shanghai-based trader.
Spot silver was nearly flat at $27.78, after
abandoning the key $28 level earlier in the week.
Spot platinum inched up 0.3 percent to $1,394.24,
while spot palladium climbed 0.6 percent to $575.47.
Precious metals prices 0632 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1602.34 -0.54 -0.03 2.46
Spot Silver 27.78 -0.01 -0.04 0.33
Spot Platinum 1394.24 4.34 +0.31 0.09
Spot Palladium 575.47 3.47 +0.61 -11.81
COMEX GOLD DEC2 1605.10 -1.50 -0.09 2.44 8602
COMEX SILVER SEP2 27.74 -0.07 -0.26 -0.63 4850
Euro/Dollar 1.2272
Dollar/Yen 79.25
COMEX gold and silver contracts show the most active months
