By Clara Denina
LONDON (Reuters) - Gold fell below $1,200 an ounce to its lowest since August 2010 on Friday, on track to post its worst quarter on record, as fears persisted that the U.S. Federal Reserve will wind down its monetary stimulus soon.
Bullion has taken a beating - losing as much as 15 percent or about $200 an ounce - since the beginning of last week when Fed Chairman Ben Bernanke laid out a strategy to roll back the bank's $85 billion monthly bond purchases in a recovering economy. This supports an increase in real interest rates, making gold comparatively less attractive.
"Gold has been battered by the Fed's policy stance, while the change in U.S. real interest rates, which have turned positive in June, has become an element disproportionately negative for gold relative to other commodities," Standard Chartered analyst Daniel Smith said.
"The next short-term target stands at $1,160, but I think prices will be higher at the end of the year than they are now as the market starts to price in that the Fed's language will unlikely change from now on."
Spot gold fell to a near three-year trough of $1,180.71 an ounce earlier and it was trading at $1,191.80 by 1405 GMT, down 0.6 percent on the day. Comex gold futures for August fell $20.20 to $1,190.40 an ounce.
Traders said stop-loss orders - automatic sale orders placed at pre-set levels to limit losses - were triggered when gold was sitting on the edge of $1,200. Others said that a lot of funds and institutions are required to close their positions ahead of the end of the quarter, causing heavy liquidation.
Gold is down 25 percent for the April-June period, its biggest quarterly loss ever, based on Reuters data that dates back to 1968. A close at its three-year lows on Friday would also mean the worst weekly performance since 1983.
Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, were unchanged at near four-year lows for a second consecutive day on Thursday. The fund has recorded unprecedented outflows of 12.26 million ounces so far this year, down 28 percent to 31.7 million ounces.
Concerns over a credit crunch and economic growth in China also weighed on investors.
Gold prices near three-year lows have attracted only a muted response from global consumers, who are waiting for them to stabilise.
"Support at $1,150-$1,160 ... should be a level that buyers are eyeing," ANZ said.
Premiums over London spot prices rose to $4 per ounce in Hong Kong and $3 in Singapore from earlier this week, dealers said.
Tokyo premiums remained stable at $2 an ounce, while Dubai premiums were around $3 and Istanbul's at $5 to $6.
Demand in top consumer India increased only slightly, but tight supplies due to government restrictions on imports led to higher premiums.
Silver touched a near three-year low at $18.19 an ounce, before gaining 1.4 percent at $18.71 an ounce. Prices fell 38 percent since the start of the year.
Platinum rose 0.3 percent to $1,316.74 an ounce and palladium was down 0.4 percent to $642.22 an ounce.
(Additional reporting by A. Ananthalakshmi in Singapore; editing by Jane Baird)