Gold below $1,300 as strong China, euro zone data lift stocks

LONDON, July 24 (Reuters): Gold broke below the psychological level of $1,300 an ounce for the first time in a week on Thursday as robust economic data from China and the euro zone deterred investors from buying into safe haven assets like the metal.

Spot gold fell 0.4 per cent to $1,299.04 an ounce by 1145 GMT, having earlier touched its worst in a week at $1,294.

US gold slid $5.20 to $1,299.30, after stop-loss orders were placed below $1,300 by traders to limit losses, prompting further selling.

The dollar was down 0.1 per cent against a basket of main currencies, mostly due to euro strength after data showed German business activity expanding in July, with the services sector growing at its fastest in three years, suggesting the European economy may be regaining momentum.

After the data release, European shares reveresed initial losses due to a raft of mixed company earnings, while Asian stocks had risen after China's factory activity expanded at its fastest pace in 18 months in July, bolstering hopes for recovery in the world's second-biggest economy.

"The market is going to follow very closely any comments from the Federal Reserve about interest rates as that is likely to continue having an impact on gold's trading pattern," Natixis analyst Bernard Dahdah said.

"Going forward I don't think there is going to be much support for gold, with Chinese demand dwindling and investor demand remaining subdued."