PRECIOUS-Gold skids 1% on China measures, stronger dollar

(Updates prices)
* China coronavirus death toll rises to 361
* Spot gold may seek a support at $1,573/oz - technicals
* Gold specs cut bullish positions in week to Jan. 28 - CFTC

By Sumita Layek
Feb 3 (Reuters) - Gold prices dipped 1% on Monday after
hitting a near four-week high, as China's central bank cut
reverse repo rates and injected liquidity into markets to help
support an economy hit by a coronavirus outbreak.
Chinese authorities pledged to use various monetary policy
tools to ensure liquidity remains reasonably ample amid the
virus outbreak in Wuhan, which has so far claimed 361 lives.
Spot gold XAU= fell as much as 1% before trading 0.8%
lower at $1,577.38 per ounce by 0819 GMT. Earlier in the day, it
touched its highest since Jan. 8 at $1,591.46. U.S. gold futures
GCv1 shed 0.4% to $1,581.70.
"The fact that the People's Bank of China (PBOC) is
backstopping (the impact from the virus) is driving gold lower,"
said Stephen Innes, chief market strategist at AxiCorp.
"... But there'll be a considerable knock-on effect over the
longer term, given the fact that 50% of China is shut this week
and there will be a drop in production and consumption."
The dollar .DXY also firmed against a basket of rivals,
making gold expensive for holders of other currencies. USD/
Asian shares fell to near two-month lows on fears the
epidemic could deliver a blow to the Chinese economy.
MKTS/GLOB
Investors took stock of PBOC's measures, which included
lowering of the 7 and 14 day reverse repo rate to 2.40% and
2.55% respectively, and an injection of 1.2 trillion yuan ($174
billion) worth of liquidity into the markets.

However, AxiCorp's Innes said "once we get through this
'band-aid effect', the reality will set in that there is an
economic tumult about to happen in China, which is going to
spread globally and force a lot of central banks to cut rates."
Data showed China's factory activity expanded at its slowest
pace in five months in January, which traders said likely did
not reflect the early impact of the virus in late January and
that the readings could worsen in the coming months.
"There are chances for further economic improvement measures
from China, that is the reason gold prices have corrected,
though the broad outlook (for gold) is still positive as long as
the virus threatens the entire economy," said Hareesh V, head of
commodity research at Geojit Financial Services.
Spot gold may seek a support at $1,573 per ounce, and then
resume its uptrend, said Reuters technical analyst Wang Tao.
TECH/C
Speculators cut their bullish positions in COMEX gold
contracts in the week to Jan. 28, data showed on Friday. CFTC/
Palladium XPD= fell 0.2% to $2,273.78 an ounce, silver
XAG= fell 1.4% to $17.78, and platinum XPT= shed 0.1% to
$955.53.