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PRECIOUS-Gold rises on dollar drop, Fed outlook eyed

* Dollar fall, lower Treasury yield, weak U.S. stocks help * Fed policymakers suggest U.S. central bank ready to cut stimulus * Private gold investment seen steady in July * Coming up: U.S. weekly jobless claims on Thursday (Adds comment from analyst, Cleveland Fed, second byline, dateline, updates prices) By Frank Tang and Clara Denina NEW YORK/LONDON, Aug 7 (Reuters) - Gold rose on Wednesday to snap a two-day losing streak, as the dollar fell on lingering uncertainty about the scope and timing of the Federal Reserve's eventual tapering of its bond-buying program. After having earlier hit a three-week low, the metal staged a $13, or 1 percent, rebound on a combination of the drop in the U.S. currency, lower U.S. Treasury bond yields and a weaker U.S. equities market. However, gold prices could resume falling on the Fed's recent indication it would begin tapering its $85 billion monthly bond purchases as early as September if the U.S. economic recovery retained momentum, analysts said. "We anticipate improving economic data, especially from the United States and Europe in coming months, may renew pressure on gold prices," said Robert Haworth, senior investment strategist at U.S. Bank Wealth Management. Earlier this week, encouraging data showing growth in the U.S. services sector and booming businesses in the euro zone and the United Kingdom dampened bullion's appeal as an investment hedge. Spot gold was up 0.5 percent at $1,287.47 an ounce by 3:01 p.m. EDT (1901 GMT), having earlier hit its lowest level since July 17 at $1,272.64 earlier in the session. U.S. gold futures for December delivery settled up $2.80 at $1,285.30 an ounce, with trading volume about 45 percent below its 30-day average, preliminary Reuters data showed. The U.S. central bank could soon begin reducing the pace of its bond-buying stimulus if recent improvement in the U.S. job market persists, the president of the Cleveland Fed, Sandra Pianalto, said on Wednesday. Other key Fed policy makers, including Chicago Fed President Charles Evans and Dallas Fed President Richard Fisher said earlier this week the U.S. central bank could cut stimulus as early as September, depending on economic data. Fed policymakers, who last week voted to continue the Fed's bond-buying, next meet on Sept. 17 and 18 to discuss policy. RETAIL BUYING STEADY While Asian physical demand remains subdued during the seasonally soft summer period, gold buying among private investors has been stable, according to a survey by online precious metals market BullionVault, which was released on Tuesday. "The heavy selling of gold we saw since the beginning of the price decline in April has stopped and begun to turn around as BullionVault customers added to their net holdings for the month of July," said Miguel Perez-Santalla, vice president at BullionVault. On the gold options front, the greater popularity of bearish bets over bullish ones suggests that the precious metal is more likely headed for another tumble instead of a sharp rally, option traders said. Among other precious metals, silver was up 0.5 percent to $19.58 an ounce. Platinum rose 0.8 percent to $1,435.99 an ounce and palladium fell 0.2 percent to $722 an ounce. 3:01 PM EDT LAST/ NET PCT LOW HIGH CURRENT SETTLE CHNG CHNG VOL US Gold DEC 1285.30 2.80 0.2 1271.80 1289.00 111,144 US Silver SEP 19.508 -0.015 -0.1 19.100 19.575 38,932 US Plat OCT 1438.30 10.50 0.7 1417.00 1441.00 8,062 US Pall SEP 723.15 0.35 0.0 712.00 725.85 3,330 Gold 1287.47 6.18 0.5 1272.64 1288.81 Silver 19.580 0.100 0.5 19.180 19.600 Platinum 1435.99 11.49 0.8 1419.00 1438.50 Palladium 722.00 1.50 0.2 715.27 723.50 TOTAL MARKET VOLUME 30-D ATM VOLATILITY CURRENT 30D AVG 250D AVG CURRENT CHG US Gold 120,807 215,508 187,958 23.44 -2.71 US Silver 47,997 49,749 54,497 28.35 0.41 US Platinum 8,259 11,922 12,453 21.23 0.00 US Palladium 4,004 3,803 5,324 (Additional reporting by A. Ananthalakshmi in Singapore; Editing by James Jukwey, Dale Hudson and Carol Bishopric)