* Comey's testimony seen as having no major surprises
* Investors to play catch-up, allocations to gold still small -UBS
* ECB keeps money taps open, drops reference to rate cuts
(Updates with Comey testimony, comments, adds NEW YORK dateline)
By DevikaKrishna Kumar and Eric Onstad
NEW YORK/LONDON, June 8 (Reuters) - Gold prices extended losses into a second session on Thursday as the dollar strengthened and as investors viewed the testimony from former U.S. FBI director James Comey as containing no significant surprises.
Investors still await the outcome of Britain's national election and opinion polls on the eve of the election showed Theresa May's Conservative Party leading between 5 and 12 percentage points over the main opposition Labour Party, suggesting she would increase her majority. Earlier in the session, the euro declined after the European Central Bank cut its forecasts for inflation and said that policymakers had not discussed scaling back its massive bond-buying programme.A weaker euro versus the dollar erodes the buying power of euro zone investors for gold, which is priced in the U.S. currency.
Spot gold was down 0.7 percent at $1,277.95 an ounce by 4:04 p.m. EDT (2004 GMT). U.S. gold futures for August delivery shed 1.1 percent to settle at $1,279.50.
Comey told the Senate Intelligence Committee he believed President Donald Trump had directed him to drop a Federal Bureau of Investigation probe into former national security adviser Michael Flynn as part of the broader Russia investigation. However, he did not make any major new revelations about alleged links between Trump or his associates and Russia. "One of the big drivers behind gold's move is the dollar catching a little bit of its footing ... if you look at the way gold is trading, until it breaks out of that recent trend around the $1,270-$1,275 area and get back into $1,260s it's hard to be bearish," said Joshua Graves, markets strategist at RJO Futures.
"I think the expectation going into the trade today was that gold could catch a bid with the Comey testimony and the uncertainty of the ECB meeting, so if you look at where gold is trending in the future, I think we will we see a run back to that $1,300 level. There just might need to be more geopolitical tension."
Some investors looked ahead to the Federal Reserve policy meeting next week where a rate hike is widely expected.
Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar.
UBS strategist Joni Teves, however, said that a growing list of global uncertainties along with macro forces are expected to push gold higher, so any dips would be an opportunity to build or add to positions.
"We think that investor allocations to gold remain small compared with other assets. An extension of gold's gains up ahead raises the risk that many would have to play catch-up," she said in a note.
In other precious metals, palladium climbed 2.5 percent to $855.22 an ounce. In the previous session it hit its highest in nearly three years but shed its early gains to end 2.3 percent lower.
Commerzbank technical analyst Karen Jones advised bullish investors to be wary of the palladium market.
"It will shortly encounter the 16-year resistance line at $867/68 and, with a 13 count on the daily chart, we would tighten up stops (on long positions) considerably," she said in a note.
Platinum fell 0.4 percent to $938, while silver lost 1 percent to $17.38.
(Additional reporting by Vijaykumar Vedala and Koustav Samanta in Bengaluru; Editing by David Goodman and Lisa Shumaker)
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