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PRECIOUS-Gold falls on strong dollar, global growth prospects

Clara Denina
Wednesday, 15 Jan 2014 | 5:44 AM ET

* U.S. data, World Bank forecasts lift stocks, dollar

* Gold drops for second straight day

* SPDR fund sees outflows of 3.56 tonnes

(Updates throughout, changes dateline from SINGAPORE)

LONDON, Jan 15 (Reuters) - Gold fell for a second straight session on Wednesday, retreating from one-month highs, as strong U.S. data and optimistic global growth prospects prompted a rally in the dollar and equities, detracting interest from the metal.

A disappointing U.S. jobs report last week stoked speculation the U.S. Federal Reserve would remain very cautious on the pace of its stimulus tapering. That gave a boost to gold, which hit a one-month peak of $1,255.00 an ounce in the previous session.

But strong U.S. retail sales on Tuesday, coupled with news the World Bank raised its forecast for global growth for the first time in three years, lifted the dollar and global shares to multi-month highs.

Spot gold eased 0.5 percent to $1,237.69 an ounce by 10.38 GMT. It posted a 0.7 percent loss on Tuesday.

U.S. gold futures for February delivery were down $7.80 to $1,237.10 an ounce.

"Gold is giving back some of the strength seen over the past week, with quite a significant level of resistance above the $1,255 level," Saxo Bank senior manager Ole Hansen said.

"U.S. data showing that retail sales have taken off neutralised the bad number of the U.S. jobs report on Friday, giving a boost to the dollar."

The dollar rose 0.4 percent versus a basket of currencies , making dollar-denominated gold more expensive for holders of other currencies.

Share markets were mostly higher after the World Bank upgraded its 2014 forecast for global growth by two tenths of a point to 3.2 percent, and predicted a faster pace for both 2015 and 2016.

"Stronger dollar and shares are a challenge for gold... we need to see some more data come through but the overall expectation is that the Fed will continue to taper at the same rate and that they won't react to just one or two U.S. numbers to change their view," Hansen said.

The Fed announced its first cut to the $85 billion in monthly bond purchases in December, citing an improving economy. Markets are now closely watching economic data to gauge whether the bank will deepen the cuts.

As a gauge of investor sentiment, holdings in the world's largest gold-backed exchange-traded fund SPDR Gold Trust fell 3.56 tonnes to a five-year low of 789.56 tonnes on Tuesday.

In the physical markets, premiums on the Shanghai Gold Exchange for 99.99 percent purity gold remained largely steady at about $13 an ounce.

China has granted licences to import gold to two foreign banks for the first time, sources told Reuters, as moves to open the world's biggest physical bullion market gather pace.

Silver fell 0.8 percent to $20.05 an ounce.

Spot platinum dropped 1.1 percent at $1,410.60 an ounce, while palladium was down 0.3 percent at $731.20 an ounce.

The metals failed to react to news that South Africa's Association of Mineworkers and Construction Union (AMCU) said it would not hesitate to call a strike in the platinum industry over wage negotiations.

(Additional reporting by A. Ananthalakshmi in Singapore; Editing by William Hardy)