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PRECIOUS-Gold steadies after rout, but bearish sentiment intact

Published 2015-07-21, 02:25 a/m
© Reuters.  PRECIOUS-Gold steadies after rout, but bearish sentiment intact
GLD
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* Gold teeters just above $1,100 support level
* Not far above its lowest since March 2010
* Holdings of top gold fund SPDR at lowest since 2008

(Updates prices)
By Manolo Serapio Jr
MANILA, July 21 (Reuters) - Gold stabilised on Tuesday
holding just above a five-year low, but investors still see
further price falls a day after the metal tumbled 4 percent.
Reflecting losing interest in gold, holdings in top gold
fund SPDR Gold Trust fell to the lowest since 2008.
Bullion, after sliding on Monday by the most since September
2013, is trading just above the critical $1,100 an ounce support
level, another breach of which could lead to a further selloff,
traders and analysts say.
"This clearly means that the bearish sentiment for gold
remains even at this juncture," said OCBC Bank analyst Barnabas
Gan. "I'm still looking at more downside risk for gold," said
Gan, who has forecast a price of $1,050 by year-end.
A looming increase in U.S. interest rates has been a key
driver in gold's descent along with sluggish demand in top
consumers China and India. China disclosed on Friday a 57
percent increase in its gold reserves from 2009, far less than
the market had estimated.
Spot gold XAU= was up 0.4 percent at $1,101.29 an ounce by
0616 GMT, after an early low of $1,096.65. The metal fell as far
as $1,088.05 on Monday, its weakest since March 2010.
U.S. gold for August delivery GCcv1 slipped 0.5 percent to
$1,101.80 an ounce.
Huge volumes sold on a key Shanghai physical contract
hastened gold's 4 percent slide in a matter of minutes on
Monday, as China appears to be shunning bullion. ID:nL3N10042I
Investors have found less and less reason to hold bullion as
a safe haven, with the dollar strengthening ahead of what is
expected to be the first increase in U.S. interest rates in
nearly a decade.
Gold's slide has helped wipe out half the gains from the
last decade's historic bull run, taking prices back to a key
chart level and threatening a break towards $1,000 an ounce.
ID:nL5N100305
But the price is unlikely to fall sharply again on Tuesday
as it did when it fell 13 percent over two consecutive trading
days in April 2013, wrote Phillip Futures analyst Howie Lee.
"Those two infamous days in gold's history was marked by a
constant decline in prices throughout both sessions, while
yesterday's tumble was marked by a one-minute drop followed by a
substantial recovery," said Lee.
"A repeat of history does not look to be on the cards but we
still expect heavy downward pressure on gold in the future. It
looks to be a matter of time before gold breaks again."
Gold holdings at SPDR GLD , the world's largest gold-backed
exchange-traded fund, dropped to 22,327,678.15 ounces
HLDSPDRGT=XAU on Monday, the lowest since August 2008.

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