PRECIOUS-Gold at 15-week high on Syria tension, stimulus talk
* U.S. lays groundwork for possible action against Syria
* Weak U.S. data raises doubts over Fed Sept tapering
* Physical demand subdued in Asia after price hike
(Updates prices, adds comment)
LONDON, Aug 27 (Reuters) - Gold hit a 15-week high on Tuesday, bolstered by safe-haven buying as the West edged towards possible military action against Syria, while strong support came from some expectation of prolonged U.S. monetary stimulus after weak U.S. data.
Western powers told the Syrian opposition to expect a strike against Syria President Bashar al-Assad's forces within days, according to sources, a response to a poison gas attack on civilians last week.
"The major reason for gold's gains is the safe-haven buying on the back of geopolitical tension in Syria and soaring crude oil prices, which are another source of support for gold," Quantitative Commodity Research owner Peter Fertig said.
Gold should benefit from high crude oil prices, which rose around $2.60 a barrel to $113.34, as it is regarded as an oil-led inflation hedge. Crude oil is one of the main components of the CPI headline inflation.
Spot gold extended initial gains to its highest since May 15 at $1,423.49 an ounce earlier and was trading at $1,421.09 by 1430 GMT, up 1.2 percent.
U.S. gold futures for December delivery climbed $28.60 to $1,421.70 an ounce.
The dollar fell, while European shares dropped, Wall Street opened lower and U.S. government debt prices rose, suggesting that the flight to safety had gathered momentum on the possibility of Western military action against the Syrian government.
U.S. TAPER DEBATE SUPPORTS
Gold has gained more than 6 percent this month and almost 19 percent from its year low of $1,180.71 hit in late June, as U.S. data has lately suggested economic growth this quarter will probably not accelerate as much as economists had hoped.
The S&P/Case Shiller composite index of 20 metropolitan areas showed U.S. single-family home prices rose 0.9 percent, shy of economists' forecast for a 1 percent increase. In a separate report, U.S. consumer confidence rose to 81.50 in August from 80.3 in July, beating economists' expectations for 79.0.
Traders believe the mixed data could deter the Federal Reserve from curtailing its stimulus programme as soon as next month. The Fed's $85-billion-a-month bond purchases have helped drive increased liquidity towards gold and other commodities.
An early end to stimulus could hurt gold by drawing investors away from non-interest-bearing assets.
"If the Fed tapers modestly ...we should see more longs get in again this week," TD Securities said in a note.
Turkey, Russia and Azerbaijan increased their gold reserves in July, data from the International Monetary Fund showed, as bullion prices recovered.
Dealers said physical demand in Asia remained subdued due to a seasonally weak summer period and the recent jump in prices.
Premiums of Shanghai gold futures to London prices have fallen to about $18 an ounce from last week's levels above $20.
Spot silver extended gains to a near-18-week high of $24.67 an ounce and was then trading up 1.4 percent to $24.62.
Platinum rose 0.2 percent to $1,543.49 an ounce. The metal reached its highest since April 9 at $1,552.50 in earlier trade, buoyed by supply disruptions in South Africa.
Palladium was up 0.6 percent at $748.72 an ounce.
(Additional reporting by A. Ananthalakshmi in Singapore; editing by William Hardy and Keiron Henderson)