* Equities, commods recover after dipping on Fed comments
* Coming up: outcome of European bank stress tests on Friday
* Lonmin reports near halving of Q3 refined platinum sales
(Updates, adds comment, changes dateline from SINGAPORE)
By Jan Harvey
LONDON, July 22 (Reuters) - Gold prices fell below $1,190 an
ounce in Europe on Thursday as investors awaited the outcome of
European bank stress tests at the end of the week, with a
majority of institutions expected to pass the tests.
Spot gold <XAU=> was bid at $1,186.05 an ounce at 0833 GMT,
against $1,191.80 late in New York on Wednesday. U.S. gold
futures for August delivery <GCQ0> fell $6.00 to $1,185.80.
The European Union is looking at whether some banks need to
raise capital as it moves to dispel concerns about weakness in
the sector. Results of the stress tests, which will assess how
banks will fare if economic conditions worsen, are due on
Friday.
"On the gold market, as a lot of the bids back in June were
primarily on the back of worries about the banking crisis in
Europe, so there has been a lot of noise about the stress
tests," said Saxo Bank senior manager Ole Hansen.
"It seems most banks are going to pass, and that is removing
some of the safe-haven support we've seen previously."
A retreat in concerns over the health of the European
financial sector has allowed prices to slide back from the
record highs at $1,264.90 an ounce they hit in June. An
attempted move back up to $1,200 was short-lived on Wednesday.
"The way we got rejected yesterday at $1,200 indicates that
there are sellers out there who are looking for an opportunity
to reduce exposure," said Hansen.
On the wider markets, European shares turned positive on
Thursday as strong corporate earnings reports offset earlier
weakness after U.S. Federal Reserve Chairman Ben Bernanke gave
gloomy comments on the U.S. recovery.
The dollar fell versus the euro after Bernanke said the U.S.
economic outlook was uncertain. He will give further testimony
before the House Financial Services Committee on Thursday.
COMMENTS
His comments on Wednesday knocked stocks lower and also
undermined sentiment towards gold. HSBC analyst James Steel said
his comments indicated potential deflation.
"Gold sank in after-hours trading as Mr. Bernanke
acknowledged the economic outlook was 'unusually uncertain'," he
said. "This reinforced sentiment that deflationary forces were
building, thus prompting gold sales."
Bernanke's comments also knocked interest in industrial
commodities, contributing to a slip in oil and copper prices
early on Thursday. Prices of both later bounced back in line
with a recovery in stock markets, however. [] []
From a technical perspective, the short-term outlook for
gold is relatively neutral after recent losses, analysts who
study charts of past prices moves said.
"Trendline support from 2008 is closing in near $1,175 and,
against here, we are looking for a bounce," said Barclays
Capital in a note.
"However, to suggest a stronger base, we prefer to see a
meaningful recovery through trendline resistance at $1,205."
Among other precious metals, silver <XAG=> was at $17.67 an
ounce against $17.77, platinum <XPT=> at $1,507.75 an ounce
against $1,521, and palladium <XPD=> at $444.05 against $449.50.
In supply news, the world's number three platinum producer
Lonmin <LMI.L> said its third-quarter refined platinum sales
nearly halved following the closure of its main furnace, but
reiterated full-year sales guidance. []
(Reporting by Jan Harvey; Editing by Anthony Barker)
