PRECIOUS-Gold hits 4-month high on Fed stimulus hopes, Spain

* Report of Spain in euro zone talks for aid boosts gold
* Fed minutes seen as clear indication of stimulus
* Disappointment due to high hopes of stimulus could weigh
* Coming up: U.S. durable goods Friday

(Adds details, graphic link, updates quotes, market activity)
By Frank Tang
NEW YORK, Aug 23 (Reuters) - Gold rose 1 percent to a
four-month high above $1,670 an ounce on Thursday, bolstered by
hopes for a new round of U.S. monetary stimulus and news that
Spain is negotiating conditions for a possible aid package.
Silver surged 2 percent and platinum group metals also
climbed on supply concerns due to labor unrest in South Africa.
Precious metals received a boost after sources told Reuters
Spain is in talks with the euro zone over conditions for
international aid, even though the country has made no final
decision to request a bailout.
Bullion consolidated its breakout above a four-month trading
range and technical resistance at the 150-day and 200-day moving
averages. However, gold's relative strength index suggests the
market might be slightly overbought following its seventh
consecutive day of gains. (r.reuters.com/xub32t)
The move higher came amid already-bullish market sentiment,
with Wednesday's minutes from the U.S. Federal Reserve's August
meeting showing policymakers were ready to deliver more stimulus
"fairly soon" unless the economy improves considerably.
"This is the first insight we've gotten in the marketplace
to think that the Fed is committed to this new stimulus program,
and that's the catalyst you need to break out of the range,"
said Jeffrey Sherman, commodities portfolio manager at
DoubleLine Capital LP, which has over $40 billion in assets
under management.
Spot gold gained 0.9 percent to $1,668.70 an ounce by
2:25 p.m. EDT (1825 GMT), having risen 3.5 percent so far this
week.
That put gold on track to post its largest monthly rise
since January's 11 percent increase.
U.S. gold futures for December delivery settled up
$32.30 at $1,672.80 an ounce. Trading volume looked set to
challenge its highest in almost a month, preliminary Reuters
data showed.
Silver rose 2.2 percent to $30.49 an ounce.
Bullion broke ranks with U.S. equities, which fell after the
number of Americans filing new claims for jobless benefits
unexpectedly increased, and after St. Louis Federal Reserve
President James Bullard played down the odds of imminent easing.

WEAKNESS SEEN IF FED DISAPPOINTS
Bullion is now up nearly 7 percent year to date, still below
the 15 percent in January when the Fed signaled it might use
more stimulus and would keep interest rates near zero until at
least 2014.
"Market expectations on monetary easing might be too high
and that could lead to pullbacks," said Nicolas Berge, a trader
at Geneva-based hedge fund Absolute Capital Group which invests
in commodities futures and currencies.
Gold's breakout above its downward trend confirms the
potential start of a longer-term bull market, Berge said.
Bullion held in top exchange-traded funds monitored by
Reuters hit a record by Wednesday's close, having risen by more
than 600,000 ounces this week so far, marking the largest weekly
rise since early February.
Gold investors also monitored news that Citi Private Bank
deciding it will withdraw up to $500 million from long-time gold
bull and prominent hedge fund manager John Paulson's flagship
Advantage funds, which held some gold investments.
In platinum group metals (PGM), ETF Securities said that its
U.S. PGM exchange-traded products added nearly $50 million in
new assets in the last week due to supply worries following
deadly violence and work stoppage in South African mines.
Platinum rose 0.4 percent to $1,536.75 an ounce and
palladium was up 3.5 percent at $650.75 an ounce.
2:25 PM EDT LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold DEC 1672.80 32.30 2.0 1654.50 1677.50 139,192
US Silver SEP 30.456 0.900 3.0 29.760 30.790 61,482
US Plat OCT 1554.90 28.40 1.9 1530.70 1563.60 12,303
US Pall SEP 656.60 27.85 4.4 628.70 658.00 5,216

Gold 1668.70 15.31 0.9 1653.17 1674.80
Silver 30.490 0.650 2.2 29.830 30.810
Platinum 1536.75 5.75 0.4 1534.00 1558.49
Palladium 650.75 22.05 3.5 632.52 655.75

TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 144,982 152,365 182,652 17.9 0.89
US Silver 87,615 40,201 56,284 24.5 0.02
US Platinum 12,828 13,702 9,620 22.95 -0.02
US Palladium 7,626 5,904 4,588

(Additional reporting by Amanda Cooper in London; Editing by
Marguerita Choy)