* Gold firms but still seen vulnerable to falling investment
* Physical buying picks up in India after price drop
* Coming up: U.S. June durable goods orders, 1230 GMT
(Updates prices)
By Jan Harvey
LONDON, July 28 (Reuters) - Gold rose above $1,160 an ounce
in Europe on Wednesday as price-sensitive buyers were tempted
back to the market by the previous day's dip to three-month
lows, with strong demand reported from major consumer India.
The metal, however, remains vulnerable to further losses
after breaking key technical levels and as investment wanes,
analysts said.
Spot gold <XAU=> was bid at $1,162.85 an ounce at 1055 GMT,
against $1,159.65 late in New York on Tuesday. U.S. gold futures
for August delivery <GCQ0> rose $4.10 an ounce to $1,162.10.
Prices fell nearly 2 percent on Tuesday as selling of
commodities in the wake of weak U.S. consumer confidence data
pushed the metal through key technical support levels.
Commerzbank analyst Daniel Briesemann said despite the
metal's slight recovery this morning, diversification into other
assets, seasonal demand weakness and a tendency towards
liquidation of long positions are all still pressuring prices.
"There has been a massive increase in risk appetite among
market participants," Briesemann said.
"We see money shifting away from safe haven assets like gold
to riskier assets like equities and oil."
U.S. stock futures pointed to a higher opening on Wall
Street on Wednesday, though European shares softened in early
trade after rising for the previous six sessions. The euro was
broadly flat against the dollar. [] []
From a technical perspective, gold prices are looking
vulnerable to further losses after breaking through support in
the $1,175-1,180 an ounce area, analysts said.
"Taking a closer look at the price action from the
June 21 highs (near) $1,265, the decline can best be described
as corrective... with downside targets seen to the 200 day
average, now $1,147," said Barclays Capital in a note.
It said a decline to near $1,114 was likely to be the worst
case scenario. "Into here, we look for renewed signs of basing
before a return to trend," it added.
U.S. DATA EYED
After the pressure exerted on the markets by Tuesday's
consumer confidence numbers, the markets are awaiting the
release of data showing June U.S. durable goods orders at 1230
GMT for clues as to the health of the world's largest economy.
While the risk of further losses remains, analysts said gold
should be supported by re-emergent physical demand at lower
prices. Traders in India, the world's biggest gold consumer,
said buying was picking up as the metal became more affordable.
[]
UBS also said in a note that its gold sales to India on
Tuesday matched the second highest this year. "Indian and
physical demand from wider hubs has helped to provide a price
floor in July," the Swiss bank said.
"UBS sales to India in July are five times greater than June
and with the expectation that physical demand will persist until
the end of the month, July will post the best month for Indian
physical demand this year," it added.
A Reuters poll of 19 analysts and traders showed Indian spot
gold prices are expected to recover to 18,050 rupees per 10
grams by the end of this quarter. Prices hit a 10-week low near
17,700 rupees earlier on Wednesday. []
Among other precious metals, spot silver <XAG=> was at
$17.58 an ounce against $17.61, spot platinum <XPT=> was at
$1,532.95 an ounce against $1,527.15, and spot palladium <XPD=>
was at $466.23 versus $464.85.
(Editing by Keiron Henderson)
