Gold prices eased in Asian trade Friday as traders await the outcome of European bank stress test.
Gold for immediate delivery was seen trading at $1194.47 an ounce at 12.00 noon Singapore time while U.S. gold futures for August delivery was at $1,194.4 an ounce on the Comex division of the NY Mercantile Exchange.
Analysts said the precious yellow metal dropped despite gains in equities as investors thought gold may retrace if the stress test shows broadly positive results.
However, they added that some traders suggest the metal's safe-haven appeal will remain largely intact on an uncertain global economic outlook.
Major listed lenders are expected to pass, while the tests may show the biggest problems lie with smaller, mainly unlisted players like Germany's Landesbanks and Spain's cajas.
Meanwhile, the world's largest gold-backed exchange-traded fund, SPDR Gold Trust said its holdings fell to 1,302.046 tons by July 22 from 1,308.128 on July 20. The holdings hit a record at 1,320.436 tons on June 29
Bullion roared to a lifetime high at $1,264.90 in late June on fears the euro zone debt crisis was spreading and the U.S. economy was slowing.
On Thursday, gold staged a comeback, posting gains after bottom fishers came in to snap up the metal at bargain prices and as other commodities rallied on enthusiasm about U.S. corporate earnings.
Gold futures for August delivery added $3.80, or 0.3%, to settle at $1,195.60 an ounce in electronic trade on the New York Mercantile Exchange.