* Gold rises for third day on signs of inflation uptick
* Analysts, technical charts warn of pullback
* Venezuela calls for gold nationalization, reaction muted
* Coming up: U.S. consumer prices Thursday (Recasts, updates comments, market activity, changes dateline, previously LONDON)
By Frank Tang
NEW YORK, Aug 17 (Reuters) - Gold rose on Wednesday on a combination of increased inflationary pressure and ideas this week's Franco-German proposals will not solve the euro zone debt crisis.
The metals third straight rise came as a report showed U.S. core producer prices rose at their fastest pace in six months in July. Also encouraging bullion buying were remarks by Venezuelan President Hugo Chavez, who said on State television that he plans to nationalize the gold industry to pad the country's international reserves.
Analysts said that bullion is vulnerable for a sharp pullback following a rally of as much as 4 percent in the last two sessions.
"Gold looks like it's overbought based on various technical-momentum indicators," said Leo Larkin, metals equity analyst at Standard & Poor's.
Larkin said that gold could sharply retreat to between $1,450 and $1,550 in the coming months.
Spot gold
U.S. gold futures for December delivery
Silver
The U.S. Labor Department said its seasonally adjusted index for prices paid at the farm and factory gate, excluding food and energy, or core PPI, rose 0.4 percent -- the largest increase since January. [ID:nN1E77G0BN]
"The recent U.S. PPI and price data elsewhere are clear indications that inflation is tracking higher, which certainly is another plus for the gold market," said Bill O'Neill, partner of commodity investment firm LOGIC Advisors.
Market anxiety supported safe-haven bids after Franco-German proposals to boost fiscal convergence in the euro zone got a cool response from other member states and failed to convince investors the bloc's debt crisis was closer to being solved.
Analysts, however, said that gold is due for a pullback after prices surged around $300 in the past 1.5 months.
The relative strength index shows that, technically, bullion is well into the overbought territory, and the metal appears to be forming a climax top on weekly charts, suggested a correction is possible.
VENEZUELAN GOLD NATIONALIZATION
Bullion's response was limited after Venezuela's President Hugo Chavez said he plans to nationalize the country's gold sector, including extraction and processing, and use the output to boost the country's international reserves. [ID:nN1E77G0WN]
"I don't think that's new news. For some time, he has been nationalizing a whole host of industries...I don't think there's a lot of gold reserves in Venezuela," said S&P's Larkin.
Even though Venezuela has some of Latin America's largest gold deposits in its south, the country's annual gold output is equivalent to 0.2 percent of global world bullion production.
The gold market has largely ignored market fundamentals as bullion has been driven by strong investment demand amid stock market turmoil and worries over U.S. and European debt levels.
Among platinum group metals, platinum
Palladium
SETTLE CHNG CHNG VOL US Gold DEC 1793.80 8.80 0.5 1781.60 1797.60 124,707 US Silver SEP 40.351 0.532 1.3 39.785 40.615 43,055 US Plat OCT 1840.80 22.70 1.2 1816.80 1848.80 6,178 US Pall SEP 775.90 19.40 2.6 750.00 784.35 4,578 Gold 1789.49 3.24 0.2 1780.00 1794.40 Silver 40.340 0.480 1.2 39.820 40.550 Platinum 1832.74 19.69 1.1 1817.25 1842.75 Palladium 770.70 18.42 2.4 752.75 781.47 TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG US Gold 138,209 238,789 185,983 26.31 1.27 US Silver 58,211 70,990 60,257 42.83 0.90 US Platinum 6,315 6,360 7,679 22 2.00 US Palladium 5,979 4,431 4,167 (Additional reporting by Amanda Cooper in London and Rujun Shen in Singapore; Editing by Bob Burgdorfer)