(Updates prices, headline; adds comment, second byline, NEWYORK to dateline)By Renita D. Young and Eric OnstadNEW YORK/LONDON, July 10 (Reuters) - Gold prices fell onTuesday, weighed down by a stronger U.S. dollar, and may re-testa seven-month low after a failed attempt to break higher in theprevious session.Spot gold was down 0.2 percent at $1,255.09 an ounceby 1:33 p.m. EDT (1733 GMT), after retreating from its highestsince June 26 at $1,265.87 in the previous session.U.S. gold futures for August delivery settled down$4.20, or 0.3 percent, at $1,255.40 per ounce.
"If this dollar strength continues, we could see anothertest of $1,240, the lows from last week and mid-December, acrucial technical level," said Carsten Fritsch, commodityanalyst at Commerzbank in Frankfurt.Bullion has been on a downtrend since touching $1,365.23 onApril 11, then the strongest since Jan. 25.The dollar's index against a basket of six major currencies was up 0.33 percent at 94.386 after dropping to itslowest since mid-June on Monday. A stronger dollar makes greenback-denominated gold moreexpensive for holders of other currencies."Strong stocks, overseas buyers need dollars to pay forstocks, so gold again becomes expensive," said George Gero,managing director of RBC Wealth Management.Investors were also awaiting developments on the trade warbetween China and the United States, said Dick Poon, generalmanager, Heraeus Metals Hong Kong Ltd.Last week, the world's top two economies slapped tit-for-tatduties on $34 billion worth of each other's imports. "So far we have seen little to no impact on the gold marketbecause of the trade war, the only dominant story is the dollarindex," said Naeem Aslam, ThinkMarkets.com chief market analyst.Trump suggested on Monday that China might be seeking toderail U.S. efforts aimed at denuclearizing North Korea. Holdings of SPDR Gold Trust , the world's largestgold-backed exchange-traded fund, dropped 0.18 percent to 800.77tonnes on Monday, its lowest since August 2017. "For gold to recover, we need to see the return ofinvestors, not only speculative but ETF investors,"Commerzbank's Fritsch said. "We may have to wait until theautumn until we see longer lasting increase in gold prices."Meanwhile, silver fell 0.13 percent at $16.05 anounce.
Platinum slipped 0.8 percent at $840.25 per ounce andpalladium shed 2 percent at $941.25.Palladium may be forming an inverted head and shoulderspattern, St?(C)phanie Aymes, head of technical analysis at SocieteGenerale, said in a note. This pattern typically points tohigher prices."The pattern's confirmation level stands at $1,043/47 andtherefore remains a prominent hurdle," she added. (Additional reporting by Karen Rodrigues in BengaluruEditing by David Evans and Cynthia Osterman)
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