PRECIOUS-Gold falls 1 pct after four-day rally as dollar firms
* Buyers cash in gains after rise to 1-month high
* Dollar index extends gains after U.S. data
* Largest physical gold fund reports fresh outflow
(Updates prices, adds comment)
LONDON, July 24 (Reuters) - Gold prices fell 1 percent on Wednesday, retreating from the previous session's one-month high, as gains in the dollar versus a basket of currencies prompted some investors to cash in gains.
The metal has climbed nearly 6 percent in the last four trading days, its biggest such rise since October 2011, after assurances from the Federal Reserve that any tapering of its gold-friendly quantitative easing policy would depend on data.
Spot gold was down 0.9 percent at $1,335.44 an ounce at 1341 GMT, while U.S. gold futures for August delivery were up $1 an ounce at $1,335.70. Spot prices rose to a peak of $1,347.69 an ounce on Wednesday, their highest since June 20.
"This is a breather we desperately needed," MKS' head of trading Afshin Nabavi said. "I think $1,300-1,350 ought to remain the range until August 2's non-farm payrolls data. If the number (is) bad for the dollar, then we ought to test $1,400."
"I think $1,300 ought to remain a strong support," he added.
The dollar index rose 0.3 percent after data showed conditions in the U.S. manufacturing sector improved in July as firms enjoyed a rebound in new orders, took on new workers and increased output at the fastest pace in four months.
Traders are watching U.S. data particularly carefully at present for any clues on the outlook for Fed monetary policy.
"Bullion is likely to remain sensitive to expectations over the timing of an eventual withdrawal of the Fed's quantitative easing program," HSBC said in a note. "Gold has faced significant headwinds since the start of this year on expectations that QE may be withdrawn prematurely."
The euro and European shares both rose after data showed euro zone private industry unexpectedly bounced back to growth this month. That contrasted with weak manufacturing data from China earlier, which weighed on oil prices.
CHINESE DEMAND HOLDS UP
Dealers say physical demand from China, the world's second largest gold consumer, has largely held up. Premiums in Hong Kong, a key supplier to China, were stable at $5 an ounce to London spot prices, one trader said.
"We thought demand would drop as prices rose, but looks like consumers like the price stability," a dealer in Singapore said.
Outflows from gold exchange-traded funds - popular investment vehicles which issue securities backed by bullion - continued, with the largest, New York's SPDR Gold Trust, reporting a 1.5 tonne drop in its holdings on Tuesday.
Among other precious metals, silver was down 0.9 percent at $20.26 an ounce. The gold/silver ratio -- the number of silver ounces needed to buy an ounce of gold -- held at 65.9 on Wednesday, close to Friday's near three-year high.
Spot platinum was flat at $1,446.99 an ounce, while spot palladium was down 0.1 percent at $738.22 an ounce.
Aquarius Platinum said on Wednesday fourth-quarter production rose 22 percent boosted by improvements at its Kroondal mine in South Africa but warned of a still "difficult and complex" environment for platinum producers.
Platinum group metals have been supported during gold's fall this year by concerns over the prospect of supply disruptions from major producer South Africa, source of three out of four ounces of the world's platinum output.
(Additional reporting by A. Ananthalakshmi in Singapore; editing by David Cowell and Keiron Henderson)