* Gold rises further, holds above $1,200
* For the technicals on gold, click []
* Coming up: ECB rate decision; 1145 GMT (Updates prices, adds quotes)
By Lewa Pardomuan
SINGAPORE, July 8 (Reuters) - Gold rose to hold above $1,200 an ounce on Thursday as strong physical buying kicked in after a recent drop to a six-week low, while sentiment was also lifted by gains in equities markets.
The Nikkei jumped nearly 3 percent after U.S. stocks logged their best one-day gain in about six weeks on optimism about the coming earnings season, discouraging speculators from selling gold to cover losses in other markets. [] []
Gold <XAU=> added $3.50 to $1,205.35 an ounce by 0254 GMT. It had dropped to its weakest since May 25 at $1,185.05 on Wednesday, or around 6 percent below a record high struck late in June, before regaining strength.
Gold would have to crack a June level around $1,230 to sustain gains, but a rebound to the current level prompted investors to start accumulating long positions again. Silver, platinum and palladium also bounced from Wednesday's lows.
"There will also be people who start to see that the decline of the past few sessions is healthy and allows technical indicators to unwind from their overbought conditions," said Ong Yi Ling, investment analyst at Phillip Futures in Singapore.
"Tough resistance will be that $1,230 level. If it can go pass that level, it will really signal a return to the bullish uptrend."
For a graphic of the 24-hour gold technical outlook, click: http://graphics.thomsonreuters.com/gfx/WT_20100807094151.jpg
U.S. gold futures for August delivery <GCQ0> rose $6.9 an ounce to $1,205.8 an ounce.
The world's largest gold-backed exchange-traded fund, SPDR Gold Trust <GLD.P> said its holdings were unchanged at 1,316.481. The holdings hit a record at 1,320.436 tonnes on June 29. []
The physical sector saw buying interest from Indonesia and Thailand, but consumers were not too aggressive after prices crossed $1,200 level again.
The lukewarm attitude to gold reiterated by China's State Administration of Foreign Exchange was unlikely to have long-term repercussions in bullion markets, although some analysts believed the comments may be a feint to keep domestic prices in check. []
"There's still some buying but I guess most people are now waiting for delivery. Physical buying is still there and my premiums have gone up to 80 cents," said a physical dealer in Singapore, who offered gold bars at 70-cents premium earlier this week.
Jewelllers in India have been stocking up ahead of religious festivals, and other physical buyers in Asia snapped up bullion after prices fell. [] []
India, which accounts for more than 20 percent of global demand, will celebrate the Hindu festival of Raksha Bandhan on Aug 24, Janmasthami and Ganesh Chaturthi in September. []
A firmer euro also supported gold. The single currency held near a seven-week high against the dollar on Thursday, with an upbeat day on Wall Street underpinning improved tolerance for risk. []
The European Central Bank holds a news conference later in the day after its monthly meeting, and will face pressure to say whether Europe-wide stress tests on banks will be tough enough to convince markets of their worth. [] Precious metals prices at 0254 GMT Metal Last Change Pct chg YTD pct chg Turnover Spot Gold 1205.35 3.50 +0.29 10.01 Spot Silver 18.11 0.11 +0.61 7.61 Spot Platinum 1531.25 7.75 +0.51 4.38 Spot Palladium 446.25 0.25 +0.06 10.05 TOCOM Gold 3436.00 92.00 +2.75 5.43 37628 TOCOM Platinum 4381.00 149.00 +3.52 0.00 13851 TOCOM Silver 52.10 1.80 +3.58 0.77 356 TOCOM Palladium 1277.00 57.00 +4.67 9.61 158 Euro/Dollar 1.2663 Dollar/Yen 88.36 TOCOM prices in yen per gram. Spot prices in $ per ounce. (Editing by Himani Sarkar)
