* Commodities, stocks, euro turn lower after weak U.S. data
* SPDR gold ETF records fresh outflow; holdings at 7-wk low
* Reserve Bank of India lifts rates more than expected
(Updates prices)
By Jan Harvey
LONDON, July 27 (Reuters) - Gold hit a twelve-week low on
Tuesday as weak U.S. consumer confidence data knocked
commodities lower, with a dip in holdings of the largest gold
exchange-traded fund further undermining sentiment.
Spot gold <XAU=> was bid at $1,168.75 an ounce at 1431 GMT,
against $1,183.75 late in New York on Monday, having earlier
touched a low of $1,166.05. U.S. gold futures for August
delivery <GCQ0> fell $15.10 to $1,168.00.
The metal rose to an all-time high of $1,264.90 an ounce in
June as concerns over sovereign debt levels in the euro zone
fuelled buying of the metal as a haven from risk, but has
struggled to hold those levels as such fears recede.
"I don't think gold is going to do as well as it did when
all the worries were there in terms of what Greece was going to
do, what Spain was going to do," said Standard Bank analyst
Walter de Wet. "It is unlikely it will see the massive ETF rises
we did in May."
"Technically, when we drop below $1,185 gold is starting to
look pretty bearish, which from an investment perspective makes
people pretty wary of putting on long positions," he added.
A decline in holdings of the world's biggest gold ETF, New
York's SPDR Gold Trust <GLD>, suggests the investment demand
that drove prices earlier in the year is waning, analysts said.
The 0.3-tonne drop in the SPDR's bullion holdings on Monday
brought them to their lowest since June 9. The trust has
recorded an outflow of 18.7 tonnes of gold so far this month.
[]
"Given current market momentum, a net redemption ETF trend
could well follow through in August," said UBS analyst Edel
Tully in a note. "January holds the title of the worst monthly
ETF performance in 2010 with 722,200 ounces of net selling
action, February follows (with a drop of) 79,600 ounces.
"If gold retains its current dynamics, then it's quite
possible that investors will return to early first-quarter
activity," she added.
COMMODITIES SLIDE
Other commodities were pressured lower by data showing U.S.
consumer confidence fell in July to the lowest level since
February. U.S. crude futures slipped 0.7 percent, while copper
slipped more than 1.5 percent. [] []
U.S. stocks also slid, erasing earlier gains, while European
shares retreated from highs. The dollar rose versus the euro in
the aftermath of the report. [] [] []
A firmer dollar often weighs on gold, as it curbs the
metal's appeal as an alternative asset and makes dollar-priced
commodities more expensive for holders of other currencies.
Meanwhile, India's central bank raised interest rates more
strongly than expected, in the face of inflation that has held
above 10 percent for the past five months. []
While higher interest rates lift the opportunity cost of
holding non-interest-bearing gold, higher inflation could boost
the metal's appeal as a hedge against rising prices.
"It depends how the Indians will see the situation --
whether they will stick to gold as an inflation hedge or prefer
to sell gold and put their rupees in a bank," said Commerzbank
analyst Eugen Weinberg.
Gold priced in euros and sterling also fell on Tuesday.
Euro-priced gold <XAUEUR=R> fell to its weakest since May 4 at
898.80 euros an ounce, while sterling-denominated bullion
reached a three-month trough at 750.79 pounds an ounce.
Among other precious metals, silver <XAG=> was at $17.69 an
ounce against $18.14, platinum <XPT=> was at $1,539.50 an ounce
versus $1,548.25 and palladium <XPD=> at $470 versus $471.70.
(Editing by Alison Birrane)
