July 16, 2020 / 4:21 AM / a month ago

PRECIOUS-Gold eases on stronger dollar, virus woes cap losses

* China GDP grows 3.2% y/y in Q2, June retail sales fall

* European Central Bank policy decision due at 1145 GMT

* GRAPHIC-2020 asset returns: tmsnrt.rs/2jvdmXl

* Interactive graphic tracking global spread of coronavirus: open tmsnrt.rs/3aIRuz7 in an external browser (Recasts, updates prices)

By Arpan Varghese

July 16 (Reuters) - Gold prices eased on Thursday due to a stronger U.S. dollar, although concerns over rising coronavirus cases and simmering U.S.-China tensions kept bullion close to a near nine-year high.

Spot gold was down 0.3% to $1,805.62 per ounce by 0705 GMT, just $12 shy of its highest since September 2011 hit last week. U.S. gold futures fell 0.3% to $1,807.90.

The dollar index rose 0.1% against its rivals, making gold more expensive for holders of other currencies.

Data out of China showed its economy grew 3.2% in the second quarter from a year earlier, while retail sales unexpectedly fell again last month, pointing to waning consumer demand.

Michael McCarthy, chief strategist at CMC Markets, said the data was mixed and gold’s elevated levels reflected concerns from some segments of investors about the global economic growth outlook for the rest of the year.

The positive readings from China failed to help risk sentiment hit by a growing Sino-U.S. rift over the control of advanced technologies and civil liberties in Hong Kong.

“Asset markets are trading in reasonably tight correlations, so the gold price is tracking behaviour in broader financial markets,” IG Markets analyst Kyle Rodda said.

“From a technical point of view, support at $1,800 is holding well and indicates that price is still committed to its uptrend.”

Safe-haven gold has risen more than 19% so far this year, also benefiting from low interest rates and widespread stimulus as it’s seen as a hedge against inflation and currency debasement, although market participants are still divided on the outlook for inflation.

“It remains questionable how sustainable the ‘liquidity on’ rally is for gold,” Stephen Innes, chief market strategist at financial services firm AxiCorp, said in a note.

Investor focus now shifts to the European Central Bank’s policy decision due at 1145 GMT.

Elsewhere, palladium dropped 0.5% to $1,971.58 per ounce, platinum lost 0.5% to $827.83 and silver slipped 1% to $19.18.

Reporting by Brijesh Patel and Arpan Varghese in Bengaluru; Editing by Shailesh Kuber and Subhranshu Sahu

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