Gold shows early signs of reclaiming safe-haven appeal after Iran war selloff

LONDON, Aug 17 (Reuters) - Gold's 9% rebound in August to around $4,400 an ounce suggests bullion is starting to regain favour with institutional investors and central banks, leaving the market better placed to extend gains as it moves beyond the initial shock of the U.S.-Israeli war with Iran.

The outbreak of the war in late February drove gold from a record high of $5,595 per ounce in January to below $4,000 in June as investors sought liquidity and some central banks tapped reserves to support domestic economies amid an oil price rally.

"It feels as though the handbrake has finally been released from gold," said Ross Norman, an independent analyst.

Limiting the upside for bullion are faltering talks to end the Iran war, subdued jewellery and coin demand as well as flows into gold-backed ETFs, which are sensitive to interest rates. According to the World Gold Council, these ETFs added only $7 billion to $582 billion of assets under management in the first half of August.