* Dollar retreat tempts buyers back to the market
* U.S. Mint gold coin sales surge, Chinese demand picks up
* Coming up: U.S. weekly jobless claims at 1230 GMT
(Updates throughout, changes dateline, pvs MANILA)
By Jan Harvey
LONDON, July 23 (Reuters) - Gold bounced back above $1,100
an ounce on Thursday from the previous session's five-year low,
as a retreat in the dollar prompted some investors to take
advantage of the price drop to buy back into the market.
Many remained wary towards the precious metal, however,
after it posted its deepest one-day loss in nearly two years on
Monday, pushing prices through key chart levels and setting it
up for further weakness.
Gold has been undermined this year by expectations that the
Federal Reserve is on track to raise interest rates for the
first time in nearly a decade, boosting the cost of holding
non-yielding bullion and lifting the dollar.
Spot gold XAU= was up 0.8 percent at $1,101.76 an ounce at
0930 GMT, while U.S. gold futures GCv1 for August delivery
were up $9.20 an ounce at $1,100.80.
"Gold is falling out of favour as the Fed is preparing to
increase borrowing costs," AvaTrade's chief market analyst Naeem
Aslam said. "This will remain the major hurdle for any upside
move for the precious metal and traders will likely be selling
into these rallies."
"The bounce in gold is nothing but a technical trade, as
most major momentum indicators are showing that the recent
sell-off is overdone."
Gold's decline on Monday was exacerbated by big trading
volumes on the Shanghai Gold Exchange after investors dumped
more than $500 million of bullion in seconds during early Asian
trading hours.
Technical analysts, who study past price patterns to
estimate the future direction of trading, say the next target
for gold below its Wednesday low near $1,087 an ounce is $1,044,
its 2010 low. ID:nL5N100305
Investors are continuing to cut their exposure to gold.
Holdings in the biggest gold-backed exchange-traded fund, SPDR
Gold Shares GLD , shrank for a fifth day on Wednesday to their
lowest since 2008.
Some demand emerged for physical metal, however. A retreat
in the dollar .DXY , which fell 0.5 percent against a currency
basket, encouraged some buying in China overnight, dealers said.
"The on-shore premium in Shanghai continued to trade in
positive territory, sitting around $1.50 for the majority of the
day, supporting an initial test of $1,100," MKS said in a note.
The gold rout this week has spurred a buying spree of
bullion coins in the United States, as government data showed
sales for this month have hit their highest in more than two
years. ID:nL1N1021JQ
Silver XAG= was up 0.5 percent at $14.86 an ounce. Spot
platinum XPT= was up 0.9 percent at $988.24 an ounce, while
spot palladium XPD= was up 0.8 percent at $629 an ounce.