By A. Ananthalakshmi
SINGAPORE (Reuters) - Gold ticked up on Tuesday as it attempted to recover from a 2 percent slide in the previous session, but was unlikely to rally as the outlook for the U.S. dollar remained optimistic.
The dollar steadied on Tuesday after recouping some of its post-payrolls losses as an uptick in risk appetite sent U.S. Treasury yields higher and underpinned Wall Street stocks. The greenback wasn't too far off a four-year high hit on Friday.
Spot gold gained 0.4 percent to $1,154.80 an ounce by 0330 GMT, after dropping 2.2 percent in the previous session.
The metal's inability to retain a 3 percent jump from Friday shows investors are selling into rallies, expecting more downside. A higher U.S. dollar discourages buying of dollar-denominated gold by holders of other currencies.
"U.S. economic growth in particular looks buoyant and is likely to drive the dollar even higher, placing downward pressure on gold," said Danny Laidler, head of the ETF Securities' Australia & New Zealand operations.
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The firm saw $85.8 million of outflows last week from gold-backed exchange-traded products, reversing the previous four-weeks of inflows as more investors became bearish on the metal's prospects, he said.
The bleak investor interest in bullion indicated that investors expect prices to drop further amid a strong recovery in the U.S. economy, the likelihood of the Federal Reserve rising rates sooner than later and a robust dollar.
Holdings of ETF Securities' rival SPDR Gold Trust, the world's top gold exchange-traded fund, fell 0.25 percent to 725.36 tonnes on Monday - a fresh six-year low.
Gold prices could tumble towards $800 to $900 an ounce, not seen since the 2008/2009 financial crisis, as the metal is no longer seen as a decent portfolio diversifier, metals merchant and hedge fund Red Kite said on Monday.
Analysts and traders surveyed by Reuters last week predicted that prices could fall to $1,000 by the end of the year, revisiting that level for the first time since 2009.
In the physical markets, buying in China - the top consumer - remained steady but at subdued levels on Tuesday. Local prices were about $1-$2 an ounce higher than the global benchmark, unchanged from the previous session.
The physical activity has not been strong enough since the price tumble to 4-1/2-year lows over the last few days, another indicator of lower prices.
(Editing by Michael Perry and Muralikumar Anantharaman)