* Briefly rises to $1,251; euro, Nikkei slip
* Coming Up: U.S. employment Index for August; 1400 GMT
(Updates prices; adds quotes)
By Lewa Pardomuan
SINGAPORE, Sept 7 (Reuters) - Gold dropped on Tuesday as
early buying subsided and the euro slipped against the U.S.
dollar, but volatile stock markets could encourage some
investors to shift to bullion.
Gold could challenge its lifetime high of around $1,264 an
ounce touched in June as the outlook for the global economy
remained murky and demand from jewellers steady during the
festive season in main consumer India, said dealers.
Spot gold <XAU=> eased $1.00 to $1,248.55 an ounce by 0321
GMT, having hit an intraday high of $1,251 on light physical
buying. U.S. gold futures for December delivery <GCZ0> were
hardly changed at $1,250.6 an ounce.
"Even though there's some liquidation in the ETF, everybody
is still bullish. There's so much uncertainty in the economy,"
said Ronald Leung, director of Lee Cheong Gold Dealers in Hong
Kong.
"The festive season is on and we expect to see buying at
the lower end. I think the next target is the all time high."
Demand in India rises during the festive season, which
begins with Raksha Bandhan in August and lasts through November
with Dhanteras -- the single-biggest gold buying day. []
The world's largest gold-backed exchange-traded fund, SPDR
Gold Trust <GLD.P>, said its holdings slipped to 1,294.442
tonnes by Sept 3 from 1,294.908 tonnes on Sept 2. The holdings
surged to a record 1,320.436 tonnes on June 29. []
The Nikkei fell 0.3 percent on Tuesday, hit by
profit-taking after four straight days of large gains, and
investors are keen to see how Wall Street reacts to U.S.
President Barack Obama's infrastructure plan proposal.
Scrambling to spur job creation, Obama proposed a six-year
plan to rebuild U.S. infrastructure with an initial $50 billion
investment and prepared new business tax cuts. []
"There's nothing much going on I must say, but we do see
light physical buying," said a dealer in Singapore. "We are
still bullish on gold and I guess it will touch new highs
soon."
The euro slid from a three-week peak against the dollar hit
the previous day, as rekindled worries about the European
banking sector prompted investors to cut risks. []
Fears that the euro debt crisis would spread helped send
gold to a record high in June.
In Shanghai gold futures, the most active December contract
<SHAUZ0> barely moved at 272.87 yuan ($40.2) a gram.
Precious metals prices at 0321 GMT
Metal Last Change Pct chg YTD pct chg
Turnover
Spot Gold 1248.55 -1.00 -0.08 13.95
Spot Silver 19.82 -0.08 -0.40 17.77
Spot Platinum 1561.00 5.70 +0.37 6.41
Spot Palladium 525.50 1.67 +0.32 29.59
TOCOM Gold 3390.00 -7.00 -0.21 4.02
13328
TOCOM Platinum 4258.00 -14.00 -0.33 -2.81
6909
TOCOM Silver 53.90 -0.30 -0.55 4.26
142
TOCOM Palladium 1432.00 -13.00 -0.90 22.92
121
Euro/Dollar 1.2804
Dollar/Yen 84.19
TOCOM prices in yen per gram. Spot prices in $ per ounce.
($1=6.78 yuan)
(Editing by Manash Goswami)
