* Dollar retreat tempts buyers back to the market
* U.S. Mint gold coin sales surge, Chinese demand picks up
* Coming up: U.S. weekly jobless claims at 1230 GMT (Updates throughout, changes dateline, pvs MANILA)
By Jan Harvey
LONDON, July 23 (Reuters) - Gold bounced back above $1,100 an ounce on Thursday from the previous session's five-year low, as a retreat in the dollar prompted some investors to take advantage of the price drop to buy back into the market.
Many remained wary towards the precious metal, however, after it posted its deepest one-day loss in nearly two years on Monday, pushing prices through key chart levels and setting it up for further weakness.
Gold has been undermined this year by expectations that the Federal Reserve is on track to raise interest rates for the first time in nearly a decade, boosting the cost of holding non-yielding bullion and lifting the dollar.
Spot gold XAU= was up 0.8 percent at $1,101.76 an ounce at 0930 GMT, while U.S. gold futures GCv1 for August delivery were up $9.20 an ounce at $1,100.80.
"Gold is falling out of favour as the Fed is preparing to increase borrowing costs," AvaTrade's chief market analyst Naeem Aslam said. "This will remain the major hurdle for any upside move for the precious metal and traders will likely be selling into these rallies."
"The bounce in gold is nothing but a technical trade, as most major momentum indicators are showing that the recent sell-off is overdone."
Gold's decline on Monday was exacerbated by big trading volumes on the Shanghai Gold Exchange after investors dumped more than $500 million of bullion in seconds during early Asian trading hours.
Technical analysts, who study past price patterns to estimate the future direction of trading, say the next target for gold below its Wednesday low near $1,087 an ounce is $1,044, its 2010 low. ID:nL5N100305
Investors are continuing to cut their exposure to gold. Holdings in the biggest gold-backed exchange-traded fund, SPDR Gold Shares GLD , shrank for a fifth day on Wednesday to their lowest since 2008.
Some demand emerged for physical metal, however. A retreat in the dollar .DXY , which fell 0.5 percent against a currency basket, encouraged some buying in China overnight, dealers said.
"The on-shore premium in Shanghai continued to trade in positive territory, sitting around $1.50 for the majority of the day, supporting an initial test of $1,100," MKS said in a note.
The gold rout this week has spurred a buying spree of bullion coins in the United States, as government data showed sales for this month have hit their highest in more than two years. ID:nL1N1021JQ
Silver XAG= was up 0.5 percent at $14.86 an ounce. Spot platinum XPT= was up 0.9 percent at $988.24 an ounce, while spot palladium XPD= was up 0.8 percent at $629 an ounce.