* Gold ETFs holdings fall to lowest since August 2009
* German index hits record highs (Updates prices)
By Clara Denina
LONDON, May 7 (Reuters) - Gold eased on Tuesday as its appeal as an alternative investment faded after European shares rose on prospects of sustained central bank stimulus, while holdings in exchange-traded funds slipped to their lowest in more than three years.
The metal came under pressure as Britain and Japan returned from a long weekend and looked to assess comments by European Central Bank (ECB) President Mario Draghi on Monday, reiterating the bank was ready to trim rates again if needed. (ID:nL6N0DN2DE]
Meanwhile, Australia's central bank cut rates to a new low of 2.75 percent and suggested it may do more.
Lower interest rates usually favour gold as they encourage investors to put money into non-interest-bearing assets such as the metal, but cyclical assets including equities seem more attractive at the moment, analysts said.
"The monetary easing news will continue to support liquidity, favouring more cyclical assets like stocks rather than defensive ones like precious metals," Credit Suisse analyst Karim Cherif said.
Cherif added that charts of past price patterns suggested that gold now had limited prospects of rising above $1,480 an ounce.
"Moreover, the technical picture seems weak and $1,480 seems difficult to break," he said.
Gold eased 0.6 percent to $1,460.60 by 1203 GMT. It had risen to a near three-week high of $1,487.80 on Friday on safe-haven buying spurred by a cut in interest rates by the ECB and the U.S. Federal Reserve's decision to stick to its stimulus programme. But it failed to hold onto gains.
"Gold is struggling against the important resistance range at $1,469.8 and $1,504.33, the 50 percent and 62 percent retracements of the March 21 to April 16 sell-off," UBS technical analysts said in a note.
U.S. gold for June delivery was at $1,460 an ounce, down 0.5 percent.
European shares rose, with sentiment boosted by a record high in the German DAX index and forecast-beating earnings, while the euro erased earlier losses versus the dollar after German industrial orders beat forecasts.
Gold plunged to $1,321.35 an ounce on April 16, its lowest in more than two years, after a drop below $1,500 and fears of central bank sales led to a sell-off that stunned investors and prompted them to slash holdings of exchange-traded funds.
The price drop ignited a buying frenzy in Asia and other parts of the world, leading to a shortage of gold bars, coins and nuggets in Hong Kong, Singapore and Tokyo, and helping the metal stage a rebound.
But gold's failure to revisit the $1,500 level suggested that the confidence of exchange-traded fund (ETF) investors in the metal was unlikely to be restored easily.
Investment in ETFs, which allow investors to gain exposure to gold prices without holding actual bullion, has fallen more than 12 percent in 2013 after rising for each of the past 12 years.
ETFs OUTFLOWS CONTINUE
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell a further 0.3 percent to 1,062.30 tonnes or 34.15 million ounces on Monday - the lowest since August 2009.
"ETF outflows continue to be gold's key downside risk," MKS Capital said.
Meanwhile, hedge funds and money managers increased their bullish bets in gold futures and options in the week to April 30 as the price of the precious metal rallied 4.5 percent during the period, a report by the Commodity Futures Trading Commission (CFTC) showed on Friday.
Interest for gold bars and coins remained keen, with the Chinese and Indian markets helping drive premiums higher, traders said.
Hong Kong's gold exports data showed flows to mainland China rose to 223.519 tonnes in March, more than doubling the 97.1-tonne level in February.
"Physical supply is still a bit tight. The world is happy to buy gold, especially when prices were below $1,400. But gold is reluctant to go above $1,475 because of the ETFs," said a dealer in Hong Kong.
In other precious metals, platinum fell 1.1 percent to $1,486.49 an ounce. Palladium dropped 0.6 percent to $687.22, having hit a two-week high of $702.50 on Friday, and silver lost 1.1 percent to $23.71 an ounce. (Additional reporting by Lewa Pardomuan in Singapore; editing by Jason Neely and Anthony Barker)
