* Dollar firms 0.55 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 with comment, refreshes prices)
By Amanda Cooper and Jan Harvey
LONDON, July 12 (Reuters) - Gold eased in Europe on Monday,
falling for the fourth time in the last seven sessions, as
improved investor confidence boosted the dollar and sapped
investment flows into the precious metals complex.
Spot gold <XAU=> was bid at $1,203.85 an ounce at 1440 GMT,
against $1,211.85 late in New York on Friday. U.S. gold futures
for August delivery <GCQ0> eased $5.60 an ounce to $1,204.20.
Gold prices hit record highs in late June as concern over
European sovereign debt levels and instability in the broader
financial markets fuelled a surge in safe-haven investment.
But as these concerns have subsided, as has investors'
appetite for gold, at least for now.
Allaying anxiety over some euro zone sovereign debt Greece
said it almost halved its central government budget deficit in
the first six months of the year as drastic spending cuts
outweighed weaker than expected tax revenues. []
"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."
In the meantime the world's largest bullion exchange-traded
fund, New York's SPDR Gold Trust <GLD>, reported a 1.5-tonne
fall in its holdings on Friday, which reflected 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 pulled back from two-month highs against the dollar
as concerns about the effectiveness of stress tests on European
banks prompted investors to trim long positions in the single
currency.
While 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.
But Andrey Kryuchenkov, a precious metals analyst with VTB
Capital said he believed the positive correlation between gold
and the U.S. dollar would likely reassert itself, especially as
the macroeconomic backdrop which prompted the safe haven push
into gold and the dollar was unchanged.
"Even though the dollar is trying to stabilise at the moment
and the euro is stalling, gold is still strongly correlated to
the dollar. Any dollar rebound is likely to signal a gold
rebound as well because that correlation is here to stay for
now," Kryuchenkov said.
Among other precious metals, silver <XAG=> was at $17.97 an
ounce against $18.06, platinum <XPT=> at $1,518.40 an ounce
against $1,529 and palladium <XPD=> at $452.60 against $456.50.
(Editing by Keiron Henderson)
