PRECIOUS-Gold slips 2 pct after strongest week in four years as stocks rebound

Gold fell more than 2 percent on Monday as a rebound in stock markets pointed to a sharper appetite for risk, pulling down prices further from last week's one-year high.

The metal is coming off its strongest weekly rise in more than four years, having peaked at $1,260.60 an ounce on Thursday, its highest since Feb. 6 last year, as turmoil in global equities stoked safe-haven demand for the metal.

After rallying $200 to last week's high from its January low, a retracement was to be expected, analysts said.

Spot gold was down 2.2 percent at $1,209.50 an ounce at 1023 GMT, while U.S. gold futures for April delivery were down 2.3 percent or $28.80 an ounce at $1,210.80.

"It was actually quite positive that gold behaved like a safe haven again, and that showed that in times when there is a lot of volatility in equity markets, gold is benefiting from that," Capital Economics analyst Simona Gambarini said.

"(But) we're not surprised by the correction," Gambarini said. "Gold is probably going to fall further if the situation improves in global equity markets. If the panic subsides, it is probably going to fall to $1,150."

European shares rallied 3 percent on Monday and Asian stocks snapped a five-session losing streak overnight as China's central bank fixed the yuan at a much stronger rate. Sharper appetite for risk helped the dollar rise against the yen and the euro.

Gold was also pressured as Chinese markets re-opened after the Lunar New Year holiday with the metal around $60 an ounce above than it ended on Feb. 5, prompting some buyers to cash in gains.

"Gold is lower because of the good bounce in equities and the Chinese selling," said a Sydney-based trader. "There is some profit-taking around."

Holdings of the world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Trust, fell just over 5 tonnes to 710.95 tonnes on Friday. That only slightly offset a net rise of just over 17 tonnes earlier in the week.

Data to last Tuesday showed hedge funds and money managers boosted bullish bets in COMEX gold futures and options in the week to Feb. 9 ahead of the bullion market's sharp rally, U.S. Commodity Futures Trading Commission data showed on Friday.

Silver was down 2.6 percent at $15.30 an ounce, while platinum was down 1.4 percent at $937.76 an ounce and palladium was down 0.6 percent at $517.60 an ounce.

(Additional reporting by A. Ananthalakshmi in Singapore; Editing by David Holmes)