Gold edges up on receding investor appetite for risk

By Clara Denina

LONDON (Reuters) - Gold edged higher on Tuesday, as European shares hit a one-week low after data that showed Britain's vote on European Union membership dented German business confidence.

The Mannheim-based ZEW institute said on Tuesday its economic sentiment index sank to -6.8 points in July from 19.2 in June.

Spot gold rose 0.3 percent to $1,333.38 an ounce at 1032 GMT, while U.S. gold was 0.3 percent higher at $1,333.70 an ounce.

Gold has risen almost 25 percent this year, hitting its highest since March 2014 at $1,374.71 after Britain's vote on the EU.

Prices have since retreated, hit by strong U.S. non-farm payrolls data, while uncertainty around the implications of the Brexit vote eased.

"We saw better economic data coming out of the U.S., with the stronger payrolls giving the Federal Reserve a bit more ammunition to raise interest rates, which could damage gold in short term," said ETF Securities head of commodity research Nitesh Shah.

Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.

Investors are now waiting for the outcome of the European Central Bank meeting on Thursday for further cues.

"There is talk of some further accommodation being doled out, in which case we could see gold moving a little higher from here," said INTL FCStone analyst Edward Meir. "If the ECB holds back, the selling could resume, with a test of key support at $1,308 possibly being in the cards and needing to hold."

Technical charts also suggest a bearish target at $1,313 for spot gold, Reuters technical analyst Wang Tao said.

Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, firmed 0.25 percent to 965.22 tonnes on Monday.

Silver fell 0.2 percent to $19.99 an ounce, down for a fourth straight session.

Platinum and palladium were down 0.6 and 0.1 percent at $1,086.49 and $644.30 an ounce, respectively.

(Additional reporting By Nallur Sethuraman and Vijaykumar Vedala in Bengaluru; Editing by William Hardy)