* Market needs fresh impetus to climb higher, traders say
* IMF sells gold to Bangladesh
(Recasts, updates prices and comments)
By Humeyra Pamuk
LONDON, Sept 10 (Reuters) - Gold dropped 1 percent on Friday
as the dollar moved back into positive territory and traders
said bullion needed fresh investment demand to extend its recent
rally and test its record high.
Bullion touched its highest in two months above $1,262 an
ounce this week on renewed worries about the European banking
sector, but gave up some gains to profit-taking and as upbeat
macro data on Thursday soothed some investor fears.
Spot gold <XAU=> was at $1,242.85 an ounce by 1314 GMT,
about 2 percent away from its all-time high of above $1,264 an
ounce struck in June and versus Thursday's $1,248.27 an ounce.
Bullion fell to a session low of $1,236.55 an ounce.
"There hasn't been enough genuine demand around," said
Simon Weeks, head of precious metals at the Bank of Nova
Scotia. "The ETF's are struggling to gain any decent investment
and the physical market's gone quiet," he said.
"It was more of a question of being up there on sentiment
rather than demand and the market's not been able to sustain
it," he said, adding that in the near term a range between
$1,225 to $1,245 an ounce could be possible.
The world's largest gold-backed exchange-traded fund, SPDR
Gold Trust <GLD.P>, said its holdings slipped to 1,293.531
tonnes by Sept 9 from 1,294.442 tonnes by Sept 3. The holdings
hit a record at 1,320.436 tonnes on June 29. []
Gold jewellery sales in Italy, the European Union's top
market by consumption, fell 23.5 percent in the second quarter
and are likely to fall for the full year, a World Gold Council
official said on Friday. []
Bullion did not see much support from the currency markets,
where the dollar <.DXY> was slightly higher in volatile trade,
making bullion more expensive for non-U.S. currency holders.
[]
UPWARD TREND IN PLACE
But still many analysts bet on gold because its safe-haven
appeal will remain due to lingering worries surrounding the
health of the global economy. On Friday, European shares
retreated from four-month highs. []
"The upward trend is still very much in place," said analyst
Daniel Brebner at Deutsche Bank. "We have seen marginal
improvement in risk appetite but worries about European
sovereign debt...that's kept investors cautious," he said.
"It's just a matter of time before we hit $1,300 an ounce,"
Brebner added. [] []
U.S. gold futures for December delivery <GCZ0> was down $7.7
at $1,243.2 an ounce. The all-time high on the December futures
chart sits at $1,270.60 per ounce. []
Interest from Asian central banks in bullion was another
factor that supported the prices in the long-term, analysts
said, after The International Monetary Fund said it sold 10
tonnes of gold to the central bank of Bangladesh this week.
Industry experts saw more central banks to follow.
"Gold is one of the few asset classes that is almost
universally permissible by the investment guidelines of emerging
countries' central banks," said Natalie Dempster, Director,
Government Affairs at the World Gold Council.
Spot silver <XAG=> was at $19.84 an ounce from $19.79 late
in New York on Thursday. It touched $20.14 an ounce earlier this
week, its highest since March 2008.
Deutsche Bank analysts said silver could outperform the
precious metals complex. "Given our conviction that central
bankers will lean heavily towards an inflationary outcome rather
than deflationary, we expect that precious metals such as silver
or palladium could outperform in a precious metals context."
Palladium <XPD=> was at $520.75 an ounce versus $518.73 an
ounce while platinum <XPT=> was at $1,551 an ounce compared with
Thursday's $1,548.28 an ounce.
(Additional reporting by Lewa Pardomuan in SINGAPORE; editing
by Keiron Henderson and Alison Birrane)
