* Gold ended 5-day rally on Thursday, longest since May
* China's central bank says no reason for yuan to fall
further
* Coming up: U.S. industrial output at 1315 GMT
(Adds Asian demand and trader comment, updates prices)
By Manolo Serapio Jr
MANILA, Aug 14 (Reuters) - Gold steadied away from a
three-week high on Friday as China calmed jittery global
markets, with upbeat U.S. retail sales refreshing expectations
for a near-term increase in U.S. interest rates.
But bullion was still set to end a seven-week losing streak
after China's yuan devaluation earlier this week pushed
investors out of risky assets and into those deemed to be
so-called safe havens.
Volatile markets were soothed as the yuan held steady after
China's central bank said there was no reason for the currency
to fall further given the country's strong economic
fundamentals.
"A further decline in volatility may reverse some of
bullion's recent 'safe-haven' inspired gains," said HSBC analyst
James Steel.
Spot gold XAU= was flat at $1,115.20 an ounce by 0628 GMT,
after peaking at $1,126.31 on Thursday, its highest since July
20. Thursday's drop ended gold's five-day rise, its longest
rally since May.
Still, the precious metal has gained nearly 2 percent for
the week so far, after a seven-week slide that was its longest
retreat since 1999.
U.S. gold for December delivery GCcv1 was similarly
unchanged at $1,115.20 an ounce.
As fears eased that China was looking at further
depreciating its currency after Tuesday's shock devaluation, a
rebound in U.S. retail sales in July renewed hopes that the
Federal Reserve could raise interest rates soon.
The yuan devaluation had raised speculation that the Fed
could delay the rate hike, which many analysts had predicted
would happen as early as next month.
Gold "will be looking for support around $1,110,
while$1,120-$1,125 should cap any moves higher unless we see
further yuan depreciation," MKS Group trader Samuel Laughlin
said in a note.
Asian buyers of physical gold were sidelined this week as
prices recovered, steadying premiums in top consumers China and
India.
China's gold demand this year is expected to at least hold
steady with last year at just under 1,000 tonnes and will not
likely be dented by the currency devaluation, the World Gold
Council said.
Spot palladium XPD= dropped 0.1 percent to $616.45 an
ounce after touching a two-week high on Thursday. Platinum
XPT= eased 0.6 percent to $986.50 an ounce and silver XAG=
was little changed at $15.40.