* AFP reports Deutsche Bank near to reducing $14 bln
* Gold up about 1 pct for September, down slightly in qtr
* U.S. consumer spending unexpectedly falls in August
(New throughout, updates prices, adds comments, report on
Deutsche Bank, NEW YORK dateline)
By Devika Krishna Kumar
NEW YORK Sept 30 Gold prices fell in volatile
trading on Friday as safe-haven demand dwindled after stocks in
major markets largely recovered from a sell-off on easing
concerns about Deutsche Bank.
Spot gold was down 0.3 percent at $1,316.32 per ounce by
2:48 p.m. EDT (1848 GMT). U.S. gold futures settled down
up 0.7 percent at $1,317.10 an ounce.
AFP reported that Deutsche Bank, Germany's largest lender,
was close to reaching a $5.4 billion settlement with U.S.
authorities over charges that it had mis-sold mortgage-backed
securities. That was far less than the $14 billion previously
demanded by the U.S. Department of Justice, assuaging some
concerns about the bank's stability.
A slump in Deutsche Bank's already battered stock had sent
Europe into a fresh tailspin early on Friday and left world
equity markets sliding toward their worst week in three months.
Safe-haven demand had supported bullion until the market
turned its attention to U.S. economic data.
The Commerce Department said on Friday that U.S. consumer
spending fell in August for the first time in seven months while
inflation showed signs of accelerating, mixed signals that could
keep the Fed cautious about raising interest rates.
Analysts polled by Reuters had expected a 0.1 percent gain
in consumer spending, which accounts for more than two-thirds of
U.S. economic activity.
"We got a little bit of a pop from Deutsche Bank but I don't
think that is enough to give this market a much needed lift,"
said Eli Tesfaye, senior market strategist for brokerage RJO
Futures in Chicago.
Dallas Federal Reserve Bank President Robert Kaplan said on
Friday that while he has scoured the U.S. economic data, he saw
no evidence of overheating, so the central bank could continue
to be patient in raising interest rates.
Gold is highly sensitive to rising U.S. interest rates, as
they increase the opportunity cost of holding non-yielding
bullion, while boosting the dollar and making commodities more
expensive for non-U.S.-firms.
The dollar index steadied to trade largely unchanged
on the day after a choppy session.
Gold is up more nearly 1 percent for the month, partly
because of the weaker dollar after the Fed chose not to raise
interest rates at last week's policy-setting meeting.
For the quarter, gold is down marginally as the metal fell
more than 3 percent in August as brokers said flight-to-safety
type of trading was not prevalent.
Spot silver was up 0.26 percent at $19.14 an ounce,
while platinum fell 0.23 percent to $1,024.3. Palladium
rose 1.26 percent to $721 on Friday and was up 21 percent
for the quarter, its biggest gain since late 2010.
(Additional reporting by Swetha Gopinath in London, Nallur
Sethuraman in Bengaluru; editing by David Evans and Richard