Gold eases for second day on uptick in risk appetite

Gold lost more ground on Friday, falling for five out of six sessions as a rebound in oil and equity markets reduced the precious metal's safe haven appeal. Gold has dropped 2.5 percent this week, its biggest weekly decline since early November.

FUNDAMENTALS

* Spot gold slid 0.1 percent to USD 1,076.88 an ounce by 0007 GMT while US gold futures gained 0.3 percent to USD 1,076.8.

* A bounce in global stock markets and oil prices added pressure on precious metals.

* The metal hit two-month highs at USD 1,112 last week as volatility in Chinese stocks battered appetite for risk, but trading has since fallen as expectations of further US interest rate increases lowers demand for the non-interest-paying asset.

* The Fed raised rates in December and attention has shifted to how many hikes will follow in 2016.

* St. Louis Federal Reserve President James Bullard said a continued decline in inflation expectations may change his outlook for further Fed rate hikes, though so far he feels the United States continues on a healthy track.

* Bullard's comments followed those by Chicago Fed President Charles Evans on Wednesday, when he said he was nervous about the potential effects of China's slowdown on the US economy and about the possibility that inflation expectations may be slipping.

* The world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, reported a 2.4 tonne rise in its holdings on Wednesday, bringing its total inflow for the year to 11.7 tonnes.

* Silver gave up 0.2 percent to USD 13.83 an ounce, palladium fell 0.1 percent at USD 490.25 an ounce and platinum added 0.1 percent to USD 835.18.

MARKET NEWS

* The energy sector led the beaten-up US stock market higher on Thursday as oil prices rebounded from 12-year lows. Major US indexes climbed about 2 percent after dropping to 3-1/2 month lows on Wednesday.

* The safe-haven yen nursed losses early on Friday, while currencies such as the Australian dollar staged a modest rebound thanks in part to a turnaround in risk sentiment that saw Wall Street and oil prices bounce off lows.