Gold hit a nine-week low on Tuesday as a rise in stock markets after well-received U.S. data dented the metal's haven appeal, with a dip in holdings of the largest gold exchange-traded fund also undermining sentiment.

Spot gold was bid at $1,173.65 an ounce at 1350 GMT, against $1,183.75 late in New York on Monday, having earlier touched a low of $1,171.65. U.S. gold futures for August delivery fell $10.50 to $1,172.60.

The metal rose to an all-time high of $1,264.90 an ounce in June as concerns over sovereign debt levels in the euro zone fuelled buying of the metal as a haven from risk, but has struggled to hold those levels as such fears recede.

"I don't think gold is going to do as well as it did when all the worries were there in terms of what Greece was going to do, what Spain was going to do," said Standard Bank analyst Walter de Wet. "It is unlikely it will see the massive ETF rises we did in May."

"Technically, when we drop below $1,185 gold is starting to look pretty bearish, which from an investment perspective makes people pretty wary of putting on long positions," he added.

A decline in holdings of the world's biggest gold ETF, New York's SPDR Gold Trust, suggests the investment demand that drove prices earlier in the year is waning, analysts said.

The 0.3-tonne drop in the SPDR's bullion holdings on Monday brought them to their lowest since June 9. The trust has recorded an outflow of 18.7 tonnes of gold so far this month.

"Given current market momentum, a net redemption ETF trend could well follow through in August," said UBS analyst Edel Tully in a note. "January holds the title of the worst monthly ETF performance in 2010 with 722,200 ounces of net selling action, February follows (with a drop of) 79,600 ounces.

"If gold retains its current dynamics, then it's quite possible that investors will return to early first-quarter activity," she added.

STOCKS RISE

On the wider markets, better appetite for assets seen as higher risk was reflected in rising equities, with U.S. stocks opening higher on Tuesday, boosted by upbeat corporate results and a larger-than-expected rise in U.S. home prices in May.

European shares also extended gains in afternoon trade on Tuesday, led higher by banks.

The euro steadied versus the dollar after the data.

Meanwhile, India's central bank raised interest rates more strongly than expected, in the face of inflation that has held above 10 percent for the past five months.

While higher interest rates lift the opportunity cost of holding non-interest-bearing gold, higher inflation could boost the metal's appeal as a hedge against rising prices.

"It depends how the Indians will see the situation -- whether they will stick to gold as an inflation hedge or prefer to sell gold and put their rupees in a bank," said Commerzbank analyst Eugen Weinberg.

Gold priced in euros and sterling also fell on Tuesday. Euro-priced gold fell to its weakest since June 5 at 901.49 euros an ounce, while sterling-denominated bullion reached a three-month trough at 754.05 pounds an ounce.

In other news, the London Metal Exchange said on it hopes to go live with cleared over-the-counter contracts on November 8.

Among other precious metals, silver was at $17.92 an ounce against $18.14, platinum was at $1,550 an ounce versus $1,548.25 and palladium at $473.88 versus $471.70. Source; Reuters: Balkans.com