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* Dollar index hits five-week high to pressure gold
* Gold bar premiums steady in Hong Kong
* SPDR holdings at lowest since February 2009 (Updates prices, adds comment, rewrites throughout, adds byline, dateline)
By Carole Vaporean and Clara Denina
NEW YORK/LONDON, July 2 (Reuters) - Gold was lower on Tuesday as the dollar strengthened and investors looked for further indications that the Federal Reserve may soon end its U.S. stimulus program.
One indication may be on Friday with a U.S. employment report.
The precious metal was higher early on Tuesday on short covering after its biggest quarterly loss since at least 1968. But those gains were brief as some money managers used the opportunity to sell out of long positions.
"The dollar index is strengthening quite a bit, equities are strengthening and you're seeing interest rates go up. That seems to be the perfect storm against the metal at the moment," said Phillip Streible, senior commodities broker at R.J. O'Brien in Chicago, adding that gold's failure to push through resistance near $1,260 per ounce caused other players to sell.
Spot gold and was off 0.58 percent at $1,245.16 by 1244 EDT (1644 GMT), after rising earlier to a near one-week high at $1,267.20 an ounce. U.S. gold futures for August delivery fell 0.92 percent to $1,244.10 an ounce.
Investors, wary of taking fresh positions before the U.S. Independence Day holiday on Thursday, are focused on Friday's U.S. monthly employment report. A strong reading would lift both U.S. Treasury yields and the dollar, and in turn weigh on gold.
"There was some short-covering earlier in the day, but generally investors are a bit cautious to take positions due to a strong dollar ahead of the U.S. (jobs) data on Friday. And if numbers are better than expected, selling momentum could kick in again," MKS Capital senior vice president Bernard Sin said.
Gold lost 23 percent in the April-June period after Fed Chairman Ben Bernanke suggested that the Federal Reserve would begin tightening its ultra-loose monetary policy when U.S. economic growth picked up. That would mean rising U.S. interest rates, making gold less attractive.
Some analysts warned that gold's recovery from last week's three-year low at $1,180.70 was not likely to last for long, with some participants anticipating eventual prices declines to $1,000 an ounce.
The dollar rose to a five-week peak against a basket of currencies on a broad view that the Federal Reserve will scale back its stimulus measures sooner than expected given the recent run of generally solid U.S. economic data.
Data so far this week show a rebound in U.S. manufacturing and a rise in factory orders, suggesting the sector was stabilizing.
Friday's U.S. non-farm payrolls report will be watched closely, with investors expecting 165,000 new jobs in June and a lower unemployment rate of 7.5 percent.
SPDR Gold Trust, the world's largest gold exchange-traded fund, reported an outflow of 1.2 tonnes to 968.30 tonnes on Monday, its lowest since February 2009. Its holdings have dropped 382.5 tonnes since the start of the year.
Physical demand has not rescued gold as it did in April, when prices fell the most in 30 years. But Shanghai futures were trading at more than a $30 premium to spot prices, indicating some renewed interest.
"There has been some good physical demand with premiums in Asia remaining elevated ... (showing) that buyers believe that gold has probably done enough on the downside for now," Marex Spectron said.
In Hong Kong and Singapore, however, gold bar premiums remained at the same levels as last week, indicating demand had not picked up strongly.
Silver lost 0.97 percent to $19.37 an ounce. It reached a near three-year low at $18.19 on Friday.
Platinum was down 0.66 percent at $1,365.49 an ounce and palladium dropped 32 percent to $686.72 an ounce. (Editing by William Hardy and Bob Burgdorfer)