* U.S. consumer prices unchanged in July
* U.S. housing starts and industrial production up
* Soros cuts gold positions in Q2, Paulson retains investment (Updates prices, adds comment)
By Clara Denina
LONDON, Aug 16 (Reuters) - Gold cut its gains on Tuesday after mixed U.S. economic data failed to give clarity on the prospects for a U.S. interest rate rise this year.
U.S. consumer prices were unchanged in July as the cost of gasoline fell for the first time in five months and underlying inflation moderated, while U.S. housing starts unexpectedly rose and industrial production rose more than forecast in the same month. gold XAU= was up 0.3 percent at $1,342.35 an ounce by 1355 GMT, retreating from an earlier 1.3-percent gain.
U.S. gold GCcv1 was unchanged at $1,347.90 an ounce.
Technically, gold's next support stands at $1,335 an ounce, while there is strong resistance in the $1,355-$1,360 area. These levels are unlikely to be broken in the short term, unless there is a dramatic change in the wider macro economic environment, including U.S. data, MKS SA head of trading Afshin Nabavi said.
The dollar was down 0.6 percent against a basket of currencies. It had earlier hit a seven-week low following a paper from San Francisco Fed President John Williams overnight arguing that central banks might have to raise inflation targets, focus more on growth and back much looser fiscal policy in future. FRX/ Tuesday, however, New York Federal Reserve President William Dudley said an interest rate hike in September was possible.
High on the U.S. calendar were also the minutes of the Federal Reserve's July meeting, due for release on Wednesday.
"The Fed should reiterate their data dependency, that in the uncertainty they would want to see inflation and wage targets ... given that the data has been lukewarm, apart from the July jobs data, December now seems the only opportunity for this year," Societe Generale (PA:SOGN) analyst Robin Bhar said.
"If the market believes that, then gold is going to stay underpinned for the whole period," he said.
Soros Fund Management LLC cut its shares in gold sharply in the second quarter, while New York-based Paulson & Co, led by John Paulson, kept its stake in SPDR Gold Trust unchanged, U.S. Securities and Exchange Commission filings showed on Monday. XAG= was down 0.2 percent at $19.74 an ounce.
Platinum XPT= , which hit a near three-week low of $1,105.50 earlier in the session, rebounded 0.6 percent to $1,115.40.
Palladium XPD= was down 0.2 percent at $692.47. It hit a three-week low of $679.72 on Monday.