Gold rose above $1,160 an ounce in Europe on Wednesday as price-sensitive buyers were tempted back to the market by the previous day's dip to three-month lows, with strong demand reported from major consumer India.

The metal, however, remains vulnerable to further losses after breaking key technical levels and as investment wanes, analysts said.

Spot gold was bid at $1,162.85 an ounce at 1055 GMT (6:55 a.m. ET), against $1,159.65 late in New York on Tuesday. U.S. gold futures for August delivery rose $4.10 an ounce to $1,162.10.

Prices fell nearly 2 percent on Tuesday as selling of commodities in the wake of weak U.S. consumer confidence data pushed the metal through key technical support levels.

Commerzbank analyst Daniel Briesemann said despite the metal's slight recovery this morning, diversification into other assets, seasonal demand weakness and a tendency toward liquidation of long positions are all still pressuring prices.

There has been a massive increase in risk appetite among market participants, Briesemann said.

We see money shifting away from safe haven assets like gold to riskier assets like equities and oil.

U.S. stock futures pointed to a higher opening on Wall Street on Wednesday, though European shares softened in early trade after rising for the previous six sessions. The euro was broadly flat against the dollar. .EU

From a technical perspective, gold prices are looking vulnerable to further losses after breaking through support in the $1,175-1,180 an ounce area, analysts said.

Taking a closer look at the price action from the June 21 highs (near) $1,265, the decline can best be described as corrective... with downside targets seen to the 200 day average, now $1,147, said Barclays Capital in a note.

It said a decline to near $1,114 was likely to be the worst case scenario. Into here, we look for renewed signs of basing before a return to trend, it added.

U.S. DATA EYED

After the pressure exerted on the markets by Tuesday's consumer confidence numbers, the markets are awaiting the release of data showing June U.S. durable goods orders at 1230 GMT for clues as to the health of the world's largest economy.

While the risk of further losses remains, analysts said gold should be supported by re-emergent physical demand at lower prices. Traders in India, the world's biggest gold consumer, said buying was picking up as the metal became more affordable.

UBS also said in a note that its gold sales to India on Tuesday matched the second highest this year. Indian and physical demand from wider hubs has helped to provide a price floor in July, the Swiss bank said.

UBS sales to India in July are five times greater than June and with the expectation that physical demand will persist until the end of the month, July will post the best month for Indian physical demand this year, it added.

A Reuters poll of 19 analysts and traders showed Indian spot gold prices are expected to recover to 18,050 rupees per 10 grams by the end of this quarter. Prices hit a 10-week low near 17,700 rupees earlier on Wednesday.

Among other precious metals, spot silver was at $17.58 an ounce against $17.61, spot platinum was at $1,532.95 an ounce against $1,527.15, and spot palladium was at $466.23 versus $464.85.

(Editing by Keiron Henderson)