(SINGAPORE) Gold prices continued to head south yesterday, with some analysts predicting more selling pressure in the coming weeks.

The yellow metal retreated after the US dollar rebounded against the euro, while firmer oil prices offered little help as investors turned cautious on bullion after it failed to sustain recent gains.

Gold dropped below a psychological level of US$1,100 an ounce as uncertainties in the outlook for the euro due to Greece's debt woes prompted some investors to shift their money to the US dollar.

The bullion has fallen by nine per cent from the high of US$1,226 an ounce seen on Dec 3 last year. Spot gold was at US$1,092.70 an ounce at 5.15 pm - down US$4.55 from New York's notional close on Wednesday, when it fell as low as US$1,089.45 an ounce, its weakest in almost two weeks.

CMC Markets chief market strategist Ashraf Laidi thinks that bullion could come under more pressure, simply because of US dollar's upside potential as the Fed attempts to mop up liquidity without having to raise funds rates.

Also, gold last week hit an all-time high of 831 euro (S$1,581) before retreating, and Mr Laidi thinks this reinforces 'our call for a lower gold in dollar terms'.

The strategist observed that falling net longs resulted more from a drop in new long positions rather than an escalation in fresh shorts.

'Reconciling gold's robust performance against euro and the fading interest in gold net longs (versus USD) justifies our bearishness in euro-USD as well as anticipation of further losses in gold/USD,' wrote Mr Laidi.

The world's largest gold-backed exchange-traded fund, SPDR Gold Trust said its holdings stood at 1,106.987 tonnes as at Feb 24, unchanged from the previous business day.

The holdings hit a record high of 1,134.03 tonnes on June 1.

The euro fell to US$1.3490 yesterday after gaining around 0.2 per cent in the previous day as worries about a possible downgrade of Greece lingered.

The dollar had weakened on Wednesday as investors cut huge long positions in the greenback after the Federal Reserve reiterated interest rates will stay low for a long time.

A drop in bullion prices spurred some buying in parts of Asia, but main consumer India was on the sidelines. A lack of activity in China after the Chinese New Year holidays also put pressure on premiums.

The China Daily reported on Wednesday that China was unlikely to buy 191.3 tonnes of gold being offered for sale by the International Monetary Fund, citing an unnamed source.

Gold, traditionally seen as a safe haven in times of economic uncertainty, has been moving in tandem with asset classes perceived as riskier, including equities and other commodities such as oil.