PRECIOUS-Gold inches up on dollar after sharp slide
* Bullion down 26 percent for the year
* U.S. dollar falls after one-week gains
* European shares mixed after bounce
(Updates throughout, changes dateline from SINGAPORE)
LONDON, June 27 (Reuters) - Gold edged up on Thursday after tumbling 12 percent over the past eight sessions, as soft U.S. economic growth data weighed on the dollar and eased fears of an abrupt end to the Federal Reserve's monetary stimulus.
The metal was however still not far from Wednesday's near three-year low, with its safe-haven appeal severely dented since Fed Chairman Ben Bernanke announced a strategy last week to wind down the central bank's $85 billion monthly bond purchases over the next few months. This would support an increase in interest rates, making gold comparatively less attractive.
Spot gold rose 0.5 percent to $1,232,66 an ounce by 0933 GMT, after a 4 percent fall on Wednesday that took the metal to its lowest since August 2010 at $1,221.80.
Comex gold rose $3 to $1,232.80, also near 3-year lows touched in the previous session.
"The market looks technically oversold and prices should see good support at $1,200," MKS Capital senior vice president Bernard Sin said.
"But a lot of funds and institutions are required to close their positions ahead of the end of the quarter, so you may see some more liquidation of positions until Friday," he added.
The dollar fell for the first time in over a week, while European shares were mixed after Wednesday's downward revision in U.S. first-quarter growth. Investors were now awaiting U.S. weekly jobless claims and pending home sales later in the day.
Gold and other commodities have benefited significantly from cheap central bank money over the years. Any pause in U.S. economic recovery momentum would mean a delay in the Fed's rollback of monetary easing and be positive for bullion.
Gold is down more than 26 percent for the year and is headed for its worst quarterly performance since at least 1968, after investors pulled back.
ABN Amro was the latest to pare its gold price forecasts, lowering its 2013 year-end gold forecast to $1,100 an ounce from $1,300 and 2014 year-end price to $900 from $1,000, citing liquidation in funds.
Holdings of the SPDR Gold Trust, the world's largest exchange-traded gold fund, stood unchanged on Wednesday, after posting their second-biggest percentage drop in holdings this year on Tuesday - down 1.7 percent or 16.23 tonnes - to their lowest levels in more than four years.
"There is no reason for investors to hold precious metals as the outlook for capital gains are dim and they pay no income," ABN Amro analyst Georgette Boele said in a note.
Physical demand has also not picked up in top consumers India and China as much as it did in mid-April when prices fell the most in 30 years.
India is reeling under the impact of new import curbs, while Chinese markets are being rocked by fears over a credit crunch.
Silver, which sank 5.5 percent in the previous session, rose 1.5 percent to $18.73 an ounce. Platinum fell 1.4 percent to $1,319.74 an ounce and palladium was down 1.9 percent to $641.47 an ounce.
(Additional reporting by A. Ananthalakshmi in Singapore; editing by James Jukwey)