* Gold prices slide to weakest since March 2010
* Biggest gold ETF holdings hit lowest since 2008
* Platinum, palladium hold near multi-year lows
* GRAPHIC-2015 asset returns: http://link.reuters.com/dub25t
(Updates prices, adds comment)
By Jan Harvey
LONDON, July 22 (Reuters) - Gold fell more than 1 percent to
a five-year low on Wednesday as a bounce in the dollar fuelled
downside momentum, with investors continuing to pull away from
the metal after its dramatic slide earlier this week.
A looming rise in U.S. interest rates, the first in nearly a
decade, has dented gold's investment appeal, encouraging more
sellers in the market after Monday's 3 percent rout, its biggest
one-day drop since September 2013. ID:L5N1021SE
Holdings in the world's biggest gold-backed exchange-traded
fund, SPDR Gold Shares GLD , fell for a fourth day on Tuesday
by another 4.8 tonnes, hitting their lowest since 2008. Its
reserves have nearly halved from their 2012 peak.
Spot gold XAU= was down 1 percent at $1,090.70 an ounce at
1400 GMT, while U.S. gold futures GCv1 for August delivery
were down $14.50 an ounce at $1,089.00. Earlier, spot prices
touched their lowest since March 2010 at $1,087.04 an ounce.
Gold's decline on Wednesday picked up momentum after the
dollar moved into positive territory against a basket of
currencies.
"We have a lot of pockets of weakness currently in the gold
market, and that is what is feeding the bearish sentiment we
see," Julius Baer analyst Carsten Menke said.
"The money managers are net short and that is relatively
rare," he said.
"The risk is increasing that you see more capitulation from
holders of physically backed products. With prices below $1,100,
more investors could get cold feet. Another washout from these
products would certainly be a major negative."
Monday's selloff came on the back of huge volumes traded on
the Shanghai Gold Exchange after investors dumped more than $500
million of bullion in New York in four seconds during early
Asian trading hours. ID:nL1N10203C
That sparked a slide through key chart levels, triggering
stop-loss orders that added to momentum. From a technical
perspective, gold remains under pressure. ID:nL5N100305
"Our next price target is seen at $1,044, the 2010 low,
followed by $1,006, the late 2009 high," technical analysts at
ScotiaMocatta said in a note.
"Lower lows and lower highs keep this bearish price move in
motion. Only a close back above $1,133 will stabilize the
metal."
Physical demand has been sluggish despite this week's steep
price drop. India is not rushing to pick up slack Chinese demand
as would-be buyers wait for further price drops, with a wedding
season lull and poor rains curbing appetite. ID:nL3N10135T
Spot platinum XPT= was down 1.1 percent at $966.74 an
ounce, while palladium XPD= was down 1.7 percent at $615, both
trading near multi-year lows. Silver XAG= was down 1 percent
at $14.68 an ounce.