* Bargain-hunting seen on physical market
* Gold strength to continue into next year
* Gold seeks direction - technicals []
* Coming up: U.S. initial jobless claims; 1330 GMT
(Updates prices)
By Rujun Shen
SINGAPORE, Dec 16 (Reuters) - Spot gold edged up on
Thursday as physical buying lent support amid a steady dollar
after upbeat U.S. data, while investors looked towards a
European Union summit that is expected to find solutions for
the region's debt crisis for trading cues.
U.S. industrial production rose at its fastest pace in
four months in November, implying a self-sustaining recovery
is now entrenched, but a mild gain in consumer prices
indicated still abundant slack in the economy. []
Spot gold edged up 0.2 percent at $1,383.09 an
ounce by 0656 GMT, after declining in the previous session on
the dollar rally following Moody's move to put Spain on review
for a possible downgrade.
U.S. gold futures edged down 0.2 percent to
$1,383.9.
"So long as the U.S. doesn't raise interest rates, gold
will remain strong, and people are looking at $1,500 or even
$1,600 price levels for next year," said a Hong Kong-based
dealer.
"China has been tightening, but it would be reluctant to
raise interest rates rapidly, fearing the inflow of hot money."
Gold was expected to trade in the range of $1,370 to
$1,420 in the last few weeks of the year, he added.
The technical signals for spot gold are conflicting as
chances are even for a rise as well as a fall from the current
level, according to Reuters market analyst Wang Tao.
For a 24-hour gold technical outlook:
http://graphics.thomsonreuters.com/WT/20101612090534.jpg
Bargain hunting was seen on physical market in Asia, but
scrap selling has subsided since prices eased from record high
levels hit last week, dealers said.
In the first ten months of the year, the gold flow from
Hong Kong, a bullion trade hub, to the mainland China more
than doubled from a year earlier, showing robust demand from
China. []
For a graphic on the gold flow from Hong Kong to China, as
well as China's gold output, click:
http://link.reuters.com/wap22r
Investors are watching the European Union leaders start a
two-day summit on Thursday, hoping to find a solution to the
region's sovereign debt crisis. []
The euro, which came under pressure on Wednesday, remained
weak and could decline further, as the EU summit was seen
unlikely to come up with a cure. The dollar was steady against
a basket of currencies.
With the euro zone's debt crisis lingering and the outlook
for U.S. economy still lukewarm, gold prices are seen to be
well-supported into the first quarter. But the momentum, which
has pushed prices up 26 percent so far this year, could ease
after that.
"After averaging around the $1,375 per ounce level in the
March quarter 2011, we expect the gold price to gradually ease
as the global recovery looks better entrenched and investor
jitters abate," said a research report by National Australia
Bank.
"Even so, the gold price should hold up quite well next
year with some ongoing investment demand and a further
recovery in jewellery consumption being supportive factors."
Holdings in the SPDR Gold Trust , the world's largest
gold-backed exchange-traded fund, edged down less than one
tonne to 1,286.187 tonnes, its lowest since late November.
Precious metals prices at 0656 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 1383.09 2.64 +0.19 26.23
Spot Silver 29.06 0.27 +0.94 72.67
Spot Platinum 1692.74 -2.76 -0.16 15.39
Spot Palladium 747.72 1.00 +0.13 84.39
TOCOM Gold 3756.00 3.00 +0.08 15.25 40757
TOCOM Platinum 4641.00 13.00 +0.28 5.93 8435
TOCOM Silver 79.00 0.00 +0.00 52.80 2056
TOCOM Palladium 2041.00 -1.00 -0.05 75.19 324
Euro/Dollar 1.3230
Dollar/Yen 84.24
TOCOM prices in yen per gram. Spot prices in $ per ounce.
(Editing by Himani Sarkar)
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