Gold steady but euro zone worries weigh

* Gold treads water above 1-1/2 week low

* Spot gold may retrace to $1,562.99/oz -technicals

* Coming up: euro zone flash PMI, July; 0758 GMT

By Rujun Shen

SINGAPORE, July 24 (Reuters) – Gold held steady on Tuesday above a 1-1/2 week low near $1,560 an ounce hit in the previous session, although deepening worries on the euro zone debt crisis kept prices under pressure.

Concerns about Spain’s finances were rekindled after a number of regions in the country sought help from Madrid, while Moody’s Investors Service changed its outlook for Germany, the Netherlands and Luxembourg to negative from stable.

Gold has mainly followed the fortunes of the euro in recent months, shifting away from its traditional status as a so-called safe haven.

The dollar rose to a two-year high, weighing on dollar-priced commodities as they became more expensive for buyers holding other currencies.

“In the short term gold still looks weak as the sovereign debt problems in Spain and Italy continue to worry investors,” said Li Ning, an analyst at Shanghai CIFCO Futures.

“The trouble in Europe will help the dollar to further strengthen, which will put pressure on gold, although the downside room for the metal is rather limited.”

The $1,530 level has provided strong support for bullion after being tested a few times this year, analysts have said.

“But we need external factors, such as a clear signal on more quantitative easing from the U.S. Federal Reserve, to lift gold beyond its current range,” Li added.

Spot gold was little changed at $1,576.01 an ounce at 0323 GMT. Prices have been moving sideways between roughly $1,530 and $1,640 since May.

The U.S. gold futures contract for August delivery  inched down 0.1 percent to $1,575.20.

Technical analysis suggested spot gold could fall towards $1,562.99 an ounce, the low in the previous session, said Reuters market analyst Wang Tao.

Gold investors paid little attention to data showing China’s manufacturing output in July grew at its fastest pace in nine months.

Asia’s physical gold market failed to shake off its recent lethargy, with buyers waiting on the sidelines for prices to dip before jumping in to pick up bargains.

“Since gold is still trapped in a range, no one is interested in putting in large orders,” said a Singapore-based dealer. “We expect buyers to return if prices drop below $1,560.”

Gold’s premium on platinum continued to widen, standing at nearly $184 an ounce — its widest since early June, as spot platinum stayed near a three-week low of $1,382.2 hit in the previous session.

Source: http://sg.finance.yahoo.com/news/precious-gold-steady-euro-zone-035504517.html