PRECIOUS-Gold steady as consumers offset waning fear factor

                                
 * Gold rises further, holds above $1,200
                                
 * For the technicals on gold, click [ID:nSGE667019]
                                
 * Coming up: ECB rate decision; 1145 GMT
                                
 
                                
 (Updates throughout with comment, prices, changes dateline
and byline)
                                
 By Amanda Cooper
                                
 LONDON, July 8 (Reuters) - Gold held above $1,200 an ounce
on Thursday, having recovered from six-week lows after consumers
were enticed back into the market, although gains were likely to
be tempered by improving optimism over the global economy. 
                                
 Global equities <.MIWD00000PUS> rose to their highest in
seven trading sessions, boosted by gains in Asia and the United
States as investors felt more confident about the upcoming
earnings season, while the euro <EUR=> hit two-month highs
against the dollar.
                                
 Spot gold <XAU=> touched $1,203.65 an ounce by 0922 GMT,
compared with $1,201.85 late in New York on Wednesday, when it
hit a low of $1,185.05, its lowest since May 25 and around 6
percent below late June's record high.
                                
 U.S. gold futures for August delivery <GCQ0> rose $4.7 an
ounce to $1,203.60 an ounce.
                                
 "I'm still friendly towards gold. We haven't sorted out any
of the problems adherent in the economy in terms of sovereign
debt, liquidity issues and so on. There will be more of that
when the stress tests get underway," said Credit Agricole
analyst Robin Bhar.
                                
 "I just feel that we could be near the top of the range for
gold. Maybe there are factors that will help support it, but I
don't think you've got the fear factor any more, the end of the
world, Armaggedon to really drive gold significantly higher."
                                
 Gold prices have hit lifetime highs on worries the European
debt crisis would spread and the U.S. economy was slowing.
                                
 
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 For a graphic on commodity performances so far this year,
please click on this link:
                                
 http://graphics.thomsonreuters.com/10/CMD_PRFG0510.html
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 The International Monetary Fund's chief economist Olivier
Blanchard said on Thursday the global economy is unlikely to
slip back into recession over the next few years, although such
a scenario is not impossible. [ID:nHKU000054]
                                
 
                                
 CALM RETURNS
                                
 A lot of nervousness in the market had also stemmed from
concern that debt-laden nations such as Portugal, Spain or
Greece would be unable to access funding.
                                
 But a series of solid government bond auctions from both
peripheral and core euro zone states, along with the smooth
repayment of nearly half a trillion euros' worth of emergency
one-year loans by the banks to the European Central Bank last
week have gone a long way towards soothing that concern.
                                
 The ECB will hold a news conference later in the day after
its monthly meeting, and will face pressure to say whether
Europe-wide stress tests on banks will be tough enough to
convince markets of their worth. [ID:nLDE6660PN]
                                
 Helping to keep gold relatively steady was a pick-up in
consumer activity in key buying regions in line with the
pullback in the price.
                                
 The physical sector saw buying interest from Indonesia and
Thailand, but consumers were not too aggressive after prices
crossed $1,200 level again.
                                
 The world's largest gold-backed exchange-traded fund, SPDR
Gold Trust <GLD.P> said its holdings were unchanged at
1,316.481. Holdings hit a record at 1,320.436 tonnes on June 29.
[GOL/SPDR]
                                
 "There's still some buying but I guess most people are now
waiting for delivery. Physical buying is still there and my
premiums have gone up to 80 cents," said a physical dealer in
Singapore.
                                
 Jewellers in India have been stocking up ahead of religious
festivals, and other physical buyers in Asia snapped up bullion
after prices fell. [GOL/AS] [GOL/IN]
                                
 India, which accounts for more than 20 percent of global
demand, will celebrate the Hindu festival of Raksha Bandhan on
Aug 24, Janmasthami and Ganesh Chaturthi in September.
[ID:nSGE6610GX]
                                
 A firmer euro also supported gold. The single currency rose
to a two-month high against the dollar on Thursday, with an
upbeat day on Wall Street underpinning improved tolerance for
risk. [USD/]
                                
 Across the rest of the precious metals complex, prices were
largely steady. Silver <XAG=> was bid at $17.99 an ounce,
compared with $18.00 on Wednesday, while platinum <XPT=> was at
$1,524 an ounce, versus $1,523.50 and palladium <XPD=> was at
$446.05, compared with $446.00.
  (Editing by Alison Birrane)