PRECIOUS-Gold falls 1 pct to hit near six-week low

    * Spot gold hits lowest since May 17
    * Hedge funds cut long position in COMEX gold for second

 (Recasts, updates prices, adds quotes)
    By Nithin ThomasPrasad
    BENGALURU, June 26 (Reuters) - Gold prices fell one percent
to hit their lowest in near six weeks on Monday, amid a stronger
dollar and rise in Asian shares, ahead of a flurry of U.S. data
due this week.     
    "This sharp depreciation, which lacks any fundamental
drivers on a relatively quiet trading day has left investors
bewildered," said Lukman Otunuga, research analyst, FXTM. 
    "With the fundamentals out of the picture, price action may
be the key culprit behind the decline," he added.        
    Spot gold        was down 1.2 percent at $1,241.89 per
ounce, as of 0912 GMT, touching its lowest since May 17.
    U.S. gold futures         for August delivery slipped 1.1
percent to $1,243.10 per ounce.
    "The market remains clueless about this trigger. The sweep
went through CME, 18,500 lots gold and 5,500 lots silver," said 
Afshin Nabavi, head of trading at MKS in Switzerland. 
    "A few centres in the Middle East and Far East are closed
for the Eid festivities, so the market is thin."   
    Investors are settling into a cautious mode while they await
the U.S. data, including June consumer confidence, pending home
sales, crude oil inventories and revised first-quarter GDP for
signs of softness that could push back rate hike expectations.
    "There's certainly some expectations of disappointing data
and also a more dovish Fed, that could keep gold prices
elevated," ANZ analyst Daniel Hynes said. "Anything on the
inflation front will be constantly watched."    
    Shares rose in Europe on Monday, with Italian banks gaining
after a deal to wind up two failed regional lenders, while the
dollar and U.S. bond yields held close to recent lows as subdued
inflation raised questions over the outlook for monetary policy.
    "I think there's a chance for a potential delay in rate
hikes, which would support gold prices further," Hynes said.
    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. 
    Holdings in SPDR Gold Trust      , the world's largest
gold-backed exchange-traded fund, dipped 0.35 percent to 851.02
tonnes on Friday.          
    Hedge funds and money managers slashed their net long
position in COMEX gold for the second straight week in the week
to June 20, and cut it slightly in silver, U.S. Commodity
Futures Trading Commission data showed on Friday.             
    Among other precious metals, silver        dropped as much
as 1.4 percent to $16.46 per ounce. Platinum        slipped up
to 0.6 percent to $920.40 per ounce. 
    Palladium        gained 0.3 percent to $854.25 per ounce. In
the previous session, it registered its biggest intraday
percentage decline since Jan. 25.

 (Reporting by Nithin Prasad, Vijaykumar Vedala and Apeksha Nair
in Bengaluru, Jan Harvey in London; Editing by Richard Pullin
and Sherry Jacob-Phillips)