* U.S. Treasury yield curve inverts for first time since 2007
* China July industrial output growth weakest in 17 years
* German economy contracts in the second quarter
* Traders see 76% chance of 25 bps rate cut by Fed in September
(Recasts, adds comments, updates prices)
By K. Sathya Narayanan
Aug 14 (Reuters) - Gold prices rose 1% on Wednesday, after falling
as much as 2% in the previous session, as an inversion in U.S.
Treasury yields and a slew of weak economic data from China and
Germany raised fears of a global recession.
The U.S. Treasury yield curve inverted for the first time since
2007, a sign that the world's biggest economy could be heading for a
Spot gold was up 0.9% at $1,514.33 per ounce, by 1215 GMT,
after rising about 1% earlier. U.S. gold futures were up 0.8% at $1,525.70.
"We got some poor Chinese data out, we're seeing some slowing
there, and the German data showing that the economy contracted in the
second quarter so, all these slowdown concerns support gold," ING
analyst Warren Patterson said.
Europe's biggest economy reversed in the second quarter as the
U.S.-China trade war and weak demand dragged on German manufacturers,
data showed, while the euro zone as a whole barely grew in the same
Meanwhile, the growth in China's industrial output in July rose at
the slowest pace in more than 17 years.
The yield curve inversion and the data tampered a rally for
equities that had been driven by more positive news on the trade
Bullion fell as much as 2% from more than six-year highs of
$1,534.31 on Tuesday after Washington decided to delay 10% tariffs on
certain Chinese products.
From a technical viewpoint, "the area of $1,530 has
temporarily arrested the gold rally, proving to be a first resistance
level in the way of bullion," ActivTrades Chief Analyst Carlo
Alberto De Casa said in a note.
Investors now await the Federal Reserve's annual symposium next
week for clues on the future trajectory of interest rates. Traders see
a 76% chance of a 25 basis-point rate cut by the U.S. central bank
"The bullish drivers (for gold) have not gone away but the
question being asked now is whether we have reached a time where
consolidation might be in order," Saxo Bank analyst Ole Hansen said.
"Gold's biggest short-term challenge is its ability to
continue to satisfy a very crowded long position."
Elsewhere, silver gained 1.2% to $17.16 per ounce, after
hitting its highest since January 2018 in previous session.
"If gold prices go much higher, investors may potentially
look out for silver as on a historical basis, silver is under-priced
relative to gold," ING's Patterson said adding that current price
action showed that "investors are seeing silver as an appealing asset."
Platinum was steady at $852.16 an ounce, while palladium
fell 1.2% to $1,437.65.
(Reporting by K. Sathya Narayanan in Bengaluru; Editing by Susan
Fenton and David Evans)
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