PRECIOUS--Gold down 1 pct as traders focus on US Fed tapering
* Gold retreats after initial rally
* Investors turn attention to upcoming Fed meeting
* Easing geopolitical tensions hurt safe-haven appeal
* Coming up: U.S. consumer price index Tuesday
(Adds trader comment, second byline, dateline; updates market activity) NEW YORK/LONDON, Sept 16 (Reuters) - Gold fell 1 percent on Monday after the bullion market failed maintain a rally set off withdraw as a candidate to lead the U.S. Federal Reserve. The yellow metal rose after the announcement, which removed market uncertainty about a long confirmation process of the already controversial Summers as the successor to Fed Chairman Ben Bernanke. But the rally faded, even though the Dow rose over 100 points, or nearly 1 percent. Bullion investors appear to have turned their attention to the tapering of the Fed's massive bond-purchase program after its September policy meeting on Wednesday. The consensus is that the Fed will reduce its bond purchases by $10 billion to $75 billion a month. "A major driver that has been weighing on gold is that some investors are staying on the sidelines trying to adjust positions before the Fed announcement," said Michael Matousek, head trader at U.S. Global Investors, which has about $1.2 billion in mutual-fund assets. Spot gold was down 1.1 percent at $1,312.09 an ounce at 2:55 p.m. EDT (1855 GMT), having earlier fallen by as much as 1.4 percent to $1,307.60. Traders said gold rose in a knee-jerk response to the Summers news because he was widely regarded as being more "hawkish" than current Fed Vice Chairman Janet Yellen, who is also a candidate and is now deemed the new front-runner. Traders now see a 55 percent probability that the first rate increase will take place in December 2014 and 68 percent chance in January 2015, according to CME Group's Fed Watch, which generates probabilities based on the price of federal funds futures traded at the Chicago Board of Trade. "The prospect that the Fed's tone will remain dovish is good for equities but not for gold at the moment, as you would need a combination of yields dropping and inflation expectations moving up to really see gold stronger," Credit Suisse analyst Karim Cherif said. U.S. gold futures for December delivery settled up $9.20 at $1,317.80 an ounce, with trading volume about 10 percent below its 30-day average, preliminary Reuters data showed. Easing geopolitical tensions also hurt gold's safe-haven appeal. Analysts said it is now less likely there will be U.S.-led military attacks on Syria in response to a chemical weapons attack blamed on President Bashar al-Assad.
In other precious metals, silver fell 1.6 percent to $21.85. Platinum slipped 1.1 percent to $1,433.74 an ounce, while palladium rose 0.8 percent to $702 an ounce.
2:55 PM EDT LAST/ NET PCT LOW HIGH CURRENT SETTLE CHNG CHNG VOL US Gold DEC 1317.80 9.20 0.7 1307.20 1336.00 138,067 US Silver DEC 22.009 0.289 1.3 21.685 22.490 37,844 US Plat OCT 1441.20 -3.30 -0.2 1437.20 1462.90 10,807 US Pall DEC 706.05 6.95 1.0 700.50 715.05 4,024 Gold 1312.09 -14.17 -1.1 1308.35 1334.46 Silver 21.850 -0.350 -1.6 21.690 22.340 Platinum 1433.74 -15.76 -1.1 1439.75 1459.75 Palladium 702.00 5.50 0.8 704.00 712.00 TOTAL MARKET VOLUME 30-D ATM VOLATILITY CURRENT 30D AVG 250D AVG CURRENT CHG US Gold 144,540 156,200 180,821 23.97 -0.57 US Silver 40,136 67,954 57,885 37.3 0.98 US Platinum 13,791 10,818 12,310 19.45 -0.51 US Palladium 4,149 6,813 5,854
(Additional reporting by A. Ananthalakshmi in Singapore; editing by Dale Hudson and James Jukwey)