* Dollar index trims losses after U.S. jobless data
* U.S. Mint gold coin sales surge, Chinese demand picks up
(Adds comment, byline, NEW YORK dateline; updates prices)
By Marcy Nicholson and Jan Harvey
NEW YORK/LONDON, July 23 (Reuters) - Gold turned lower on
Thursday, dipping back below $1,100 an ounce as a
steeper-than-forecast drop in U.S. jobless claims helped the
dollar recover from earlier lows, though prices remained under
pressure after this week's plunge.
Gold 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. Low prices tempted some buyers back to
the market on Wednesday, but gains remained muted.
Spot gold XAU= was down 0.3 percent at $1,089.34 an ounce
at 2:53 p.m. EDT (1853 GMT), off a high of $1,105.60. U.S. gold
futures GCv1 for August delivery settled up 0.2 percent at
$1,094.10.
"The markets are all focusing on a September rate hike, so
assuming that is when it occurs, you have to think that gold is
going to remain under downward pressure up until that point,"
Citi analyst David Wilson said.
Gold has been undermined this year by expectations that the
U.S. 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.
"If you're thinking about the Federal Reserve hiking rates
in September maybe December, in real terms that could be a
larger impact than you may have thought," said Bart Melek, head
of commodity strategy for TD Securities in Toronto, noting there
is not enough inflation to attract buying of gold.
Technical analysts, who study past price patterns to
estimate the future direction of trading, say once its current
bounce from Monday's slump is over, the next target for gold
below its Wednesday low near $1,087 an ounce is $1,044, its 2010
low. ID:nL5N100305
"The bounce in gold is nothing but a technical trade, as
most major momentum indicators are showing that the recent
selloff is overdone," AvaTrade's chief market analyst Naeem
Aslam said.
Investors continue 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,
while weak gold prices spurred buying of bullion coins in the
United States where Mint sales jumped to a 2013 high.
ID:nL1N1021JQ
Silver XAG= was down 1 percent at $14.63 an ounce. Spot
platinum XPT= fell 0.8 percent at $971 an ounce, while spot
palladium XPD= was down 1.6 percent at $613.75 an ounce.