* ETF holdings hit lowest since Sept 2009
* European shares rise on ECB rate cut expectations
* Coming Up: U.S. Consumer confidence; 1400 GMT (Updates prices)
By Clara Denina
LONDON, April 30 (Reuters) - Gold edged lower on Tuesday as the dollar strengthened against the euro, while support from the physical market softened as major buyer China was on holiday.
Gold fell 0.2 percent to $1,471.79 by 1154 GMT. It had gained nearly 1 percent on Monday on expectations the U.S. Federal Reserve would keep the pace of its bond buying unchanged at $85 billion a month following weaker-than-expected U.S. growth.
U.S. gold for June delivery rose 0.3 percent to$1,472.10 an ounce.
"There has been a bit of short-covering rally after the price sell-off in mid-April, and to some extent that rally is now subsiding," Bank of America Merrill Lynch analyst Michael Widmer said.
Short-covering occurs when traders are forced to buy an asset they had agreed to sell at a future date in anticipation its price would fall.
"I think we are going back to that environment where investors struggle to see reasons to purchase gold, and the physical market is slowing down as prices are rallying," Widmer added.
Gold prices sank to $1,321.35 on April 16, their lowest in more than two years, after a drop below $1,500 led to a further sell-off that stunned investors and prompted them to keep slashing holdings of exchange-traded funds.
The dollar edged higher versus the euro as a sharp fall in euro zone inflation and rising unemployment bolstered expectations of an interest rate cut by the European Central Bank on Thursday.
Investors also positioned for the U.S. Fed to extend monetary stimulus measures. The Fed is currently buying longer-dated U.S. Treasuries and mortgage-backed bonds every month and is expected to vote to keep doing so at the conclusion of a two-day policy-setting meeting on Wednesday.
Other data this week include the U.S. consumer sentiment later in the day and non-farm payrolls on Friday.
"It is a wait-and-see week, with Chinese holidays, FOMC meetings and non-farm payrolls," said David Govett, head of precious metals at broker Marex Spectron.
"This will make it hard to predict where we go for the short term. Gold's correlation with the dollar seems to be particularly close at the moment, so use this as a short term indicator."
SPDR POISED FOR RECORD DECLINE
The SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.22 percent to 1,080.64 tonnes on Monday to their lowest since September 2009.
The fund's holdings were set for a record monthly decline of 11.5 percent.
In the physical market, buying subsided as China, the world's second-largest gold consumer after India, was on holiday until Thursday for Labour Day celebrations.
Supply of gold bars, coins and nuggets in Asia remained tight, however, with premiums for gold bars in Hong Kong reaching their highest level since October 2011, up to $3 an ounce to spot London prices this week.
Silver fell 0.7 percent to $24.34 an ounce.
Platinum edged up 0.1 percent to $1,506.74 an ounce, having reached a two-week high of $1,522 on Monday. Palladium was up 0.1 percent to $696.97, having hit a two-week high of $700.72 earlier.
Platinum benefited from renewed supply issues in main producer South Africa, where third largest miner Lonmin shut down its Number Two furnace for 30-40 days following an undisclosed incident.
Anglo American Platinum said it would next week reveal the outcome of talks with the government and unions about restructuring plans, in which it could cut up to 14,000 jobs and mothball two mines in South Africa. (Additional reporting by Lewa Pardomuan in Singapore; Editing by Jane Baird)
