* Gold may stay capped ahead of month-end, U.S. Q2 GDP
* Holdings by SPDR Gold ETF fall 0.3 pct <XAUEXT-NYS-TT>
By Risa Maeda
TOKYO, July 29 (Reuters) - Gold steadied on light physical
buying on Wednesday, paring the previous day's decline on
receding risk tolerance after a weak U.S. confidence reading
suggested consumer demand would languish for some time to come.
Oil and share prices were also beaten down by faltering
confidence on Tuesday, but the dollar rose on increased demand
for safe-haven assets.
Gold has become increasingly reliant on the dollar for
direction. When the dollar weakens, gold and other
dollar-priced commodities become cheaper for holders of other
currencies.
"The uptrend is not yet much damaged because the market is
still holding around the $935 to $938 level. We can see some
reasonable buying interest there," said Louis Lok, a senior
dealer at Bank of China in Hong Kong.
Spot gold <XAU=> was at $936.60 an ounce at 0545 GMT,
little changed from New York's notional close of $936.65 on
Tuesday, when it touched a low of $933.70, the lowest since
July 17.
U.S. gold futures for August delivery <GCQ9> were down 0.3
percent at $936.7 an ounce. On Tuesday the contract tumbled
$14.40 on the COMEX division of the New York Mercantile
Exchange.
Bullion, together with oil and share prices, had been
supported by economic optimism and neared $960 on Monday, the
highest level since June 11.
But a rapid rise in long futures positions recently has
made the gold market vulnerable to falls, traders said.
"Profit taking hit the market yesterday. But if not
yesterday it could have been at any time ahead of the month-end
and U.S. second-quarter GDP data on Friday," said Shuji Sugata,
a manager at Mitsubishi Corp Futures and Securities' research
section.
"Gold is being underpinned above the 25-day moving average
for now, but I don't think a quick turnaround is likely," he
said. The 25-day moving average stood at around $934.
In other markets, crude oil prices <CLc1> dropped below $67
a barrel on Wednesday, extending the previous day's decline.
[]
Regional equities markets were mostly lower, with the MSCI
Asia-Pacific index excluding Japan <.MIAPJ0000PUS> falling 1
percent.
But gold mostly took these in its stride as it now has a
higher correlation with the euro/dollar rate than with other
markets, traders said.
The euro edged up towards $1.42 <EUR=> after falling 0.5
percent on Tuesday, when the dollar recovered from its lowest
level of the year against a basket of currencies. []
Investment in exchange-traded funds was sluggish, with
holdings by the world's largest gold-backed exchange-traded
fund falling for the first time since July 22.
The SPDR Gold Trust <GLD> said holdings fell 3.36 tonnes or
0.3 percent to 1,083.25 tonnes on July 28 from the previous
business day. []
Precious metals prices at 0546 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 936.30 -0.35 -0.04 6.38
Spot Silver 13.60 -0.09 -0.66 20.14
Spot Platinum 1190.00 -2.50 -0.21 27.68
Spot Palladium 255.50 -1.00 -0.39 38.48
TOCOM Gold 2847.00 -82.00 -2.80 10.65
39476
TOCOM Platinum 3617.00 -111.00 -2.98 36.39
13219
TOCOM Silver 413.80 -17.60 -4.08 29.60
156
TOCOM Palladium 778.00 -20.00 -2.51 41.45
385
Euro/Dollar 1.4159
Dollar/Yen 94.23
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Additional reporting by Miho Yoshikawa; Editing by Ben Tan)
