PRECIOUS-Gold heads for biggest weekly loss since December

* Spot gold may fall to $1,524 - technicals

* Coming Up: U.S. CFTC commitment of traders data; 1930 GMT

(Updates prices)

By Lewa Pardomuan

SINGAPORE, June 22 (Reuters) - Gold gave up early gains on
Friday and was heading for its biggest weekly loss since
December after growing fears of a global economic slowdown hit
commodities, prompting investors to seek safety in the U.S.
dollar.

Gold has lost some of its safe-haven appeal after financial
market turmoil caused by the prolonged debt crisis in Europe and
the U.S. Federal Reserve's decision to take only a modest step
to boost the economy prompted investors to cash in bullion to
cover losses.

But with the U.S. economic recovery still flailing, the
jobless rate at 8.2 percent, and Europe's debt crisis simmering,
there was hope that the Fed may launch even more unconventional
action, including a third round of a long-term bond buying
programme known as quantitative easing.

Gold rose in early trade to a high of about $1,568
an ounce before slipping to $1,563.50 by 0614 GMT, down $1.92.
Bullion fell 2.5 percent on Thursday - its biggest one-day drop
since late February after the Fed stopped short of launching
another round of quantitative easing.

The market is still discounting the possibility that the Fed
could adopt more policy measures to stimulate growth, said
Jeremy Friesen, commodity strategist at Societe Generale in Hong
Kong.

"But we believe there has to be more. Regardless of what
happens in Europe, there's going to have to be more stimulus."

U.S. gold futures for August delivery fell $1.10 an
ounce to $1,564.40.

Previous rounds of asset purchases by the Fed to drive down
interest rates and stimulate the economy had weakened the U.S.
dollar, boosted global stock markets and prompted investors to
turn to gold as a hedge against inflation.

Gold hit a record of about $1,920 in 2011, when investors
turned to the metal as a safe haven during the debt crisis in
Europe. But this year, declines in other markets have caused
investors to sell gold for cash, sending prices to the lowest in
more than four months at $1,527 in mid-May.

Asian stock markets slipped on Friday, but the dollar held
near its highest in more than a week against a basket of major
currencies after a long-anticipated credit rating downgrade of
the world's major banks by Moody's.

The moves came after China's factory sector shrank for an
eighth straight month, business activity across the euro zone
contracted for a fifth month and U.S. manufacturing grew at the
slowest pace in 11 months.

Lower gold prices prompted buying by jewellers in Hong Kong,
although the low volume suggested consumers were waiting for
further declines.

"There are bargain hunters today, but I think they are not
aggressive. We've seen also jewellery makers and speculators in
the physical market. I think $1,520 should be a good support for
gold," said a dealer in Hong Kong. "I think QE3 is likely to
happen if the economy is really bad."

Investors awaited the release of U.S. Commodity Futures
Trading Commission data later in the day for clues on investor
interest in bullion.

Money managers raised their net length in gold by 1,258
lots, or about 1 percent, to 99,684 lots in the week to June 12,
as signs of slowing U.S. economic recovery and the euro zone
debt crisis fuelled speculation of monetary stimulus from
central banks around the world.

Precious metals prices 0614 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1563.50 -1.92 -0.12 -0.02
Spot Silver 26.81 -0.03 -0.11 -3.18
Spot Platinum 1418.70 -11.80 -0.82 1.84
Spot Palladium 602.03 -1.30 -0.22 -7.73
COMEX GOLD AUG2 1564.40 -1.10 -0.07 -0.15 28650
COMEX SILVER JUL2 26.80 -0.04 -0.16 -4.01 9000
Euro/Dollar 1.2558
Dollar/Yen 80.40

COMEX gold and silver contracts show the most active months

(Editing by Ed Davies)