* Dollar firms 0.5 pct versus retreating euro <EUR=>
* SPDR gold ETF holdings decline as investor appetite wanes
* Net long position in New York gold futures, options slips
(Updates, adds comment, changes dateline from SINGAPORE)
By Jan Harvey
LONDON, July 12 (Reuters) - Gold slipped in Europe on
Monday, surrendering some of the previous session's more than 1
percent gains, as the dollar firmed and fresh investment flows
into the metal dried up and concern over euro zone risk receded.
Spot gold <XAU=> was bid at $1,207.65 an ounce at 0918 GMT,
against $1,211.85 late in New York on Friday. U.S. gold futures
for August delivery <GCQ0> eased $1.50 an ounce to $1,208.30.
The precious metal had risen sharply since the start of the
year, hitting a record $1,264.90 an ounce in June as worries
over euro zone sovereign debt and consequent instability in the
currency markets fuelled strong safe-haven buying by investors.
However, that investment has petered out as such concerns
have retreated.
"The sovereign risk situation has eased," said Peter Fertig,
a consultant at Quantitative Commodity Research. "Greece is
making progress, they have implemented pension reforms, which
was one of the crucial reforms to implement."
"Indications for bank stress tests are positive, which also
indicates fears have been overdone," he added. "For that reason,
there is very little to remain in gold, so I expect prices could
trade down."
The world's largest bullion exchange-traded fund, New York's
SPDR Gold Trust <GLD>, reported a 1.5-tonne retreat in its
holdings on Friday, showing reduced appetite for gold. Its total
holdings have fallen nearly 6 tonnes so far in July. []
Physically backed ETFs found favour with investors in the
financial crisis, as they were seen as a safe haven at a time
other assets classes were prone to quickly losing value. Inflows
especially surged in early 2009 and the second quarter of 2010.
Data released by the Commodity Futures Trading Commission
also showed non-commercial net long positions in New York gold
futures and options fell 41,642 to 231,381 in the week to July
6. []
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For a graphic showing the speculative net positions of
non-commercials in gold futures and options, click on:
http://graphics.thomsonreuters.com/10/CFTC_GOLD090710.gif
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RETRACED
"The gold book has now retraced back to its early April
levels, when the metal was trading south of $1,150," said UBS
analyst Edel Tully.
"This effectively means that all exchange positioning
related to heightened sovereign risk has now been removed, which
makes sense given that investors currently place less likelihood
on the risk of a sovereign default."
Better appetite for nominally higher-risk assets was shown
in a further rise in equity markets overnight in Asia, though
stocks later retreated in Europe as miners fell, tracking weaker
base metals prices.
Copper prices fell more than 1 percent in London on Monday
as China reported a drop in copper imports for the third
straight month in June. Among other commodities, oil prices also
retreated below $76 a barrel. [] []
The euro fell against the dollar on Monday, pulling away
from a two-month high as concerns about the effectiveness of
stress tests on European banks prompted investors to trim long
positions in the single currency.
While surging risk aversion benefited both gold and the
dollar earlier this year, gold is more typically pressured by
gains in the U.S. unit, which makes the metal more expensive for
holders of other currencies.
Among other precious metals, silver <XAG=> was at $17.96 an
ounce against $18.06, platinum <XPT=> at $1,521 an ounce against
$1,529 and palladium <XPD=> was at $450.75 against $456.50.
(Editing by Sue Thomas)
