* Economic jitters support investment in bullion
* Physical buying seen strong ahead of festivals in India
* Coming up: U.S. weekly jobless claims, Philly Fed data
(Updates throughout, changes dateline from SINGAPORE)
By Jan Harvey
LONDON, Aug 19 (Reuters) - Gold prices rose towards $1,230
an ounce in Europe on Thursday, close to the previous session's
near seven-week high, as concerns over the outlook for economic
growth supported investment demand for the precious metal.
Spot gold <XAU=> was bid at $1,229.90 an ounce at 0801 GMT,
against $1,227.55 late in New York on Wednesday. U.S. gold
futures for December delivery <GCZ0> rose 50 cents to $1,231.90.
The precious metal rose as high as $1,232.35 an ounce on
Wednesday, its strongest since July 1. Gold has risen more than
1 percent so far this week, but physical buying remains
relatively buoyant despite high prices, traders said.
Afshin Nabavi, head of trading at MKS Finance, said he
expects physical demand from India ahead of the festival season
there to support prices in the near future. "Physical demand was
still around yesterday despite the higher prices," he noted.
"Ahead of the initial jobless claim and any other surprises,
I would think (we will see) a trading range of $1,228-1,235 for
the time being," he added.
The markets are awaiting a raft of U.S. data later in the
session, including weekly jobless numbers at 1230 GMT and the
Philadelphia Fed business activity index for August at 1400 GMT,
for more clues on the outlook for the world's largest economy.
Fresh signs of weakness could hurt assets more exposed to
the economic cycle, like equities and industrial commodities,
and lift so-called safer investments like gold, analysts said.
Better appetite for bullion from investors was reflected in
a rise in holdings of the world's largest gold exchange-traded
fund, meanwhile.
New York's SPDR Gold Trust <GLD> said its holdings rose just
under 1 tonne to 1,295.516 tonnes, their highest since July 27,
on Wednesday. []
ETF Securities, which said in a weekly report on Thursday
that inflows into its physically backed gold products had hit a
13-week high, attributed gold ETF buying to economic concerns.
"The renewed interest in gold in particular indicates
investors are again turning defensive about the economic
outlook," it said.
"Softer economic data continues to impact confidence about
the sustainability of the global recovery, fuelling inflows into
the precious metals sector."
FURTHER GAINS SEEN
The technical outlook for gold is also looking more positive
after the metal's recent gains, analysts said, though strong
pockets of resistance remain.
"Having broken through daily cloud resistance earlier in the
week, a retracement level at $1,242 could be tough to break in
the near term," said Barclays Capital in a note.
"Nevertheless, consolidation above $1,190 is bullish,
and we continue to expect the cited resistance eventually to
give way and gold to test $1,350 later in the year."
Elsewhere the dollar firmed more than 0.5 percent against
the euro <EUR=>. European shares turned flat after opening
higher, while oil came under pressure from a stronger dollar and
brimming U.S. petroleum inventories. [] [] []
Meanwhile, Bunds edged lower as equities looked slightly
stronger, although fears over the health of the global economy
were seen continuing to dominate sentiment, supporting demand
for core government debt. []
Among other precious metals, silver <XAG=> was bid at $18.40
an ounce against $18.32, while platinum <XPT=> was at $1,531.50
an ounce against $1,527 and palladium <XPD=> was at $485.75
against $486.50.
(Reporting by Jan Harvey; Editing by Alison Birrane)
