* Spot gold to drop to $1,562 -technicals * Coming up: U.S. ISM non-manufacturing index at 1400 GMT (Updates prices, adds physical market) By Lewa Pardomuan SINGAPORE, April 3 (Reuters) - Gold fell for a second straight day on Wednesday to hit its lowest in four weeks, with investors shifting their money into risky assets for better returns on renewed optimism over the U.S. economy. Bullion has slipped more than 3 percent since hitting a 1-month high in March as fears about the debt crisis in Europe subsided and Wall Street rallied on strong U.S. economic data, curbing safe-haven demand. Gold dropped as much as 0.8 percent to $1,563.06 an ounce on Wednesday, its weakest since March 8, after initially hitting an intraday day high of $1,576.91 on bargain hunting. By 0628 GMT, gold was at $1,565.16 an ounce, down $10.08. Physical dealers noted buying from jewellers in Indonesia, but other consumers were expected to wait for prices to slip further. Weaker gold prices dragged down other precious metals, with silver falling to its lowest since July, attracting physical buying from Thailand.
"Actually, all depends on the flavour of the day. Now, I suppose sentiment has shifted. Perhaps, with the U.S. economy on a stronger footing, it's better to be in equities," said CIMB regional economist Song Seng Wun. "Perhaps one should take a bit more risk. It is more of a case of people taking money off the table from gold because they are not quite sure where the technical downside is for gold at this point." U.S. data on Tuesday showed February factory orders rose 3 percent, slightly above expectations. U.S. gold for June delivery fell $10.70 an ounce to $1,565.20.
Premiums for gold bars were unchanged in Singapore at $1.20 an ounce to spot London prices. "People did buy a bit yesterday when prices started to come off. There's light buying today, but we don't see a rush in purchases," said a dealer in Singapore. "Silver has come down so much, and we see a pickup in demand." Japan's Nikkei average jumped 3 percent on Wednesday, its biggest one-day rise in two months, while the euro was subdued ahead of policy decisions by the European Central Bank. Investors were awaiting the release of the U.S. nonfarm payrolls report on Friday, which may confirm market views the Federal Reserve wants to maintain its extremely accommodative monetary policy. Two Fed officials voiced cautious optimism on Tuesday the U.S. economy was on a lasting upswing, but they offered differing views on what that outlook ought to mean for the central bank's controversial programme of buying bonds to stimulate growth. Fears that central banks' money-printing to buy assets will stoke inflation have been a key driver in boosting gold, which rallied to an 11-month high in October last year after the Fed announced its third round of aggressive economic stimulus. "There is a lack of interest in gold right now and everybody seems to be sitting on the sidelines. Stocks are still looking more attractive for investors than gold and that's where money continues to flow into," said Yuichi Ikemizu, branch manager for Standard Bank in Tokyo. "The $1,550 level is the low for the current ranges and I doubt that prices will break below that level." Gold contracts on the Tokyo Commodity Exchange extended losses as Japanese investors shrugged off tensions between North and South Korea. Precious metals prices 0628 GMT Metal Last Change Pct chg YTD pct chg Volume Spot Gold 1565.16 -10.08 -0.64 -6.53 Spot Silver 26.90 -0.30 -1.10 -11.16 Spot Platinum 1557.24 -12.26 -0.78 1.45 Spot Palladium 760.72 -3.28 -0.43 9.93 COMEX GOLD JUN3 1565.20 -10.70 -0.68 -6.60 27620 COMEX SILVER MAY3 26.87 -0.38 -1.41 -11.13 8888 Euro/Dollar 1.2790 Dollar/Yen 93.53 COMEX gold and silver contracts show the most active months (Additional reporting by Chikako Mogi in TOKYO; Editing by Muralikumar Anantharaman and Joseph Radford)