* Equities under pressure after raft of soft data
* SPDR gold ETF reports fresh outflow on Friday
* Physical gold demand recovers slightly as prices decline
(Updates, adds comment, changes dateline from SINGAPORE)
By Jan Harvey
LONDON, July 5 (Reuters) - Gold edged below $1,210 an ounce
in Europe on Monday as the risk aversion that drove prices to
record highs last month abated, with caution during the U.S.
Independence Day holiday also keeping a lid on gains.
A return of some physical demand after last week's price
correction underpinned the metal, however.
Spot gold <XAU=> was bid at $1,208.80 an ounce at 0940 GMT,
against $1,210.60 late in New York on Friday. U.S. gold futures
for August delivery <GCQ0> firmed $2.30 an ounce to $1,210.00.
The retreat of the extreme risk aversion that drove gold to
a record $1,264.90 an ounce in June amid concerns over European
sovereign debt levels has left the metal vulnerable to losses in
the absence of other immediate positive drivers.
A drop in holdings of the world's largest gold exchange
traded fund, New York's SPDR Gold Trust <GLD>, after relatively
steady inflows throughout June reflects weaker investment
appetite for the metal, Commerzbank analyst Eugen Weinberg said.
"Most of these purchases were driven by fear, and fear seems
to be leaving the market," he said. "People are not so afraid of
data at the moment, and it appears measures by the European
Central Bank are enough to hold the crisis for the next month.
"We think during the third quarter stagnation or even
falling prices are possible," he added. "But in the fourth
quarter, we again expect further price gains, and expect prices
to reach new all-time highs, probably above $1,300."
The SPDR gold trust reported an outflow of a further 9,780
ounces on Friday, after a decline of just over 39,000 ounces in
the previous session, its first dip since early June. Its
holdings hit a record 1,320.436 tonnes that month. []
On the wider markets, the dollar firmed, up 0.2 percent
against a basket of six other currencies and 0.25 percent versus
the euro <EUR=>. Strength in the U.S. unit makes dollar-priced
commodities more expensive for holders of other currencies.
SLOWDOWN FEARED
European shares eased slightly as data on the UK service and
euro zone retail sectors disappointed, and worries over bank
stress tests hurt financials. World equities fell amid concerns
over slowdowns in the United States and China. []
Other commodities firmed a touch, with oil climbing further
above $72 a barrel and base metals such as copper, zinc and
nickel climbing after last week's drop. [] []
Analysts reported some improvement in physical demand for
gold as prices declined. "Jewellery manufacturers are likely to
buy fresh stocks on sharp price dips to lend further support to
the market," Fairfax investment bank said in a note.
Buying of gold in the world's top bullion consumer, India,
was pressured by a nationwide strike in the country over a fuel
price hike, however. []
Among other precious metals, silver <XAG=> firmed to $17.84
an ounce versus $17.80. Platinum <XPT=> was at $1,505 an ounce
against $1,496.50, while palladium <XPD=> was flat at $430.
"For now, $1,500 in platinum and $425 in palladium are
acting as a 'home' for prices," said UBS analyst Edel Tully in a
note. "At these levels, both metals are trading close to
fundamental value."
She said much of the speculative element to the metals'
price rise earlier in the year had now been removed.
"This will not insulate the metals from further downside
pressure in coming months should concerns about global growth
escalate, but the clearing out of the excessive speculative
overhang should make them more resilient to the downside."
(Reporting by Jan Harvey; Editing by Keiron Henderson)
