PRECIOUS-Gold eases before cenbank meetings, up for July

* Gold eases as caution grows ahead of Fed, ECB meetings
* Bullion posts 1 percent gain in July
* SPDR Gold ETF posts biggest monthly outflow in 2012

(Adds details, updates market activity)
By Frank Tang
NEW YORK, July 31 (Reuters) - Gold fell on Tuesday as
investors took profits after last week's gains, as the market
considered the prospect of additional monetary stimulus from
U.S. and European central-bank meetings this week.
Bullion was also dragged lower by sharply lower crude oil
prices and by grain futures retreating from their recent record
rallies due to a severe drought in the U.S. Midwest.
Despite Tuesday's losses, the metal posted its second
consecutive monthly rise after a string of weak U.S. economic
indicators boosted expectations that the Federal Reserve was
exploring new ways to support growth.
Last week, gold gained 2.5 percent, largely helped by
European Central Bank President Mario Draghi's pledge to do
whatever is necessary, within the ECB's mandate, to prop up the
euro.
"Gold and the other precious metals are vulnerable to
short-covering rallies, as net long positions on the Comex are
at multi-year lows. Should the FOMC adopt an accommodative
stance, short-covering in the gold and silver markets could be
rapid, we believe," said James Steel, HSBC's metals analyst.
Spot gold was down 0.4 percent at $1,613.30 an ounce
by 3:11 p.m. EDT (1911 GMT). I t notched a monthly gain of around
1 percent in July.
U.S. gold futures for December delivery settled down
$9.40 at $1,614.60, with trading volume about 25 percent below
its 30-day average, preliminary Reuters data showed.
Both the Fed Open Market Committee (FOMC) and the European
Central Bank are due to make announcements regarding their
policy outlooks at the end of their meetings scheduled for this
week.
Investors will be focused on the language used in the Fed
Open Market Committee (FOMC) policy statement on Wednesday at
the end of its two-day meeting. Recent disappointing U.S. jobs
reports and other economic indicators have prompted the U.S.
central bank to explore new tools to support growth.

PHYSICAL DEMAND LAGS
Interest in physical gold remains lackluster, with demand
from major consumer India crimped by higher prices and the
world's largest gold-backed, exchange-traded fund, SPDR Gold
Trust, set for its biggest monthly outflow this year in
July.
Holdings of the exchange-traded products tracked by Reuters
, which include the SPDR along with funds operated
by ETF Securities and Zurich Kantonal Bank, are set to decline
for a third straight month in July, down around 3 tonnes.
U.S. Mint's American Eagle gold coins are also poised to log
their weakest July monthly sales in five years, reflecting
growing uncertainty about the future price direction of the
precious metal.
In addition, much higher gold exports to Iran helped narrow
Turkey's trade deficit by more than expected in June, data
showed on Tuesday.
Gold sector officials have said Iranians were turning to
gold for savings and possibly trade as Western sanctions tighten
to force Iran to curb its nuclear program.
Among other precious metals, silver was down 0.6
percent at $27.96 an ounce, while platinum edged up 0.1
percent at $1,411.99 an ounce and spot palladium rose 0.6
percent to $586.75 an ounce.

3:11 PM EDT LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold DEC 1614.60 -9.40 -0.6 1614.20 1631.60 114,334
US Silver SEP 27.914 -0.119 -0.4 27.865 28.335 33,643
US Plat OCT 1416.90 5.10 0.4 1413.90 1434.60 7,408
US Pall SEP 590.55 2.20 0.4 586.70 594.10 2,447

Gold 1613.30 -7.19 -0.4 1611.45 1627.70
Silver 27.960 -0.180 -0.6 27.940 28.370
Platinum 1411.99 1.54 0.1 1416.75 1430.50
Palladium 586.75 3.30 0.6 589.80 591.25

TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 128,607 170,192 196,124 19.44 0.30
US Silver 36,542 52,430 58,222 28.75 0.54
US Platinum 7,570 10,019 8,943 23 0.00
US Palladium 2,587 3,186 4,385

(Additional reporting by Jan Harvey in London; Editing by Bob
Burgdorfer and Leslie Gevirtz)