PRECIOUS-Gold falls as bonds signal Fed moving to curb stimulus
* Bullion in retreat after hitting 2-month high
* Rising bond yields signal quick Fed tapering
* SPDR Gold sees first weekly inflow in months
* Silver last week made biggest weekly gain since Sept 2008
(Updates prices, adds quotes)
LONDON, Aug 19 (Reuters) - Gold fell on Monday, after hitting two-month highs earlier in the day, as bond yields rose, signalling that the U.S. Federal Reserve could be moving closer to reducing monetary stimulus next month.
Spot gold fell 0.6 percent to $1,367.29 an ounce by 1450 GMT, having earlier hit a two-month peak of $1,384.10. U.S. gold futures for December delivery were down quarter of a percent at $1,367.50.
Gold has rallied in recent weeks due to uncertainty about Federal Reserve policy, technical buying triggered by milestone lows hit in June and most recently fresh inflows into bullion-backed funds.
But analysts suggested the rally was a correction in an overall downtrend. Gold has lost nearly a fifth of its value so far this year, leaving a record high of $1,920.30 in September 2011 far behind.
"There's a mystery at the moment, because the bond market clearly believes that the Fed tapering is just about to start," said Jesper Dannesboe, senior commodity strategist at Societe Generale.
German and U.S. government bond yields rose to multi-month highs on Monday.
Providing some support to gold, the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, posted a 0.4 percent increase in its holdings last week to 915.32 tonnes, its first net gain in months.
So far this year, investors have withdrawn about $19 billion from the fund.
Hedge funds and money managers also raised their net long positions in gold and silver, a report by the Commodity Futures Trading Commission showed on Friday.
U.S. DATA, FED MINUTES
Shanghai gold futures rose 2 percent on Monday. Demand from China and India is set to soar to a record 1,000 tonnes each in 2013, the World Gold Council said last week.
Minutes of the Fed's July policy meeting are due to be released on Wednesday, and they could strengthen expectations for a September tapering of its commodities-friendly stimulus measures.
"Our economists expect the minutes to reveal that the committee members viewed the improvement in labour markets and reduced downside risk as sufficient to signal that should the current trends continue, many on the committee stand ready to reduce the pace of asset purchases in September," Barclays said in a note.
Silver rose to its highest in almost three months at $23.60 an ounce before slipping to trade at $23.14, down 0.3 percent. Last week, the metal made its biggest weekly gain since September 2008, up around 13 percent.
Platinum was down 0.8 percent at $1,507.24, and palladium was down 0.9 percent to $753.50 an ounce.
(Additional reporting by A. Ananthalakshmi in Singapore; Editing by Veronica Brown and Jane Baird)