* U.S. ISM Manufacturing data hits over one-year high
* SPDR gold ETF holdings at over 8-year peak
* Silver drops from more than 4-month peak
* Interactive graphic tracking global spread of coronavirus: open https://tmsnrt.rs/3aIRuz7 in an external browser. (Updates prices)
By Nakul Iyer
July 1 (Reuters) - Gold dropped from a near eight-year high on Wednesday as equities gained on the back of encouraging U.S. manufacturing data and rising hopes for a potential COVID-19 vaccine.
Spot gold XAU= fell 0.6% to $1,770.57 per ounce by 1:31 p.m. EDT (1731 GMT), having earlier hit a peak since October 2012 at $1788.96. U.S. gold futures GCcv1 settled down 1.1%, at $1,779.90.
"A renewed sense of optimism over the U.S. economy recovering quicker than expected may fuel the risk-on mood, ultimately denting appetite for safe-haven assets including gold," said FXTM analyst Lukman Otunuga.
U.S. manufacturing activity rebounded in June, hitting its highest level in more than a year, bolstering the stock market along with hopes of a vaccine developed by BioNTech BNTX.O and Pfizer (NYSE:PFE) PFE.N that has shown potential in early stage human trials. remains in an uptrend on the daily charts but the momentum could be running out of steam," Otunuga said, adding that if prices dip below $1,765 that may open a path back towards $1,747 and $1,715.
The bullion surged over 13% last quarter due to fears of a second wave of infections and as global central banks have bumped up stimulus measures and kept interest rates low to ease the economic blow from the pandemic. in how state governments are handling their economic shutdowns in the United States and the strong likelihood that there will be more stimulus are likely to support gold prices, said Jeffrey Sica, founder of Circle Squared Alternative Investments.
Reflecting high investor demand, holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust GLD , increased by 211.9 tonnes, or nearly 22%, in the second quarter. GOL/ETF
Other precious metals also declined, with silver XAG= falling 1.1% to $17.93. The metal earlier in the day hit its highest since late February.
Palladium XPD= slid 1.1% to $1,908.68 per ounce and platinum XPT= eased 0.4% to $813.15 per ounce.