* Gold off 7-week low, strong dollar may limit upside
* SPDR gold holdings unchanged
By Lewa Pardomuan
SINGAPORE, Dec 23 (Reuters) - Gold edged higher on
Wednesday as bargain hunters resurfaced after the price dropped
to its weakest in seven weeks the previous day, but a firmer
U.S. dollar was likely to cap gains.
Gold is about 11 percent below a lifetime high of $1,226.10
struck in early December, mainly driven by a recovery in the
dollar as market-friendly U.S. data boosted optimism about the
world's largest economy.
Spot gold <XAU=> was quoted at $1,084.40 an ounce by 0537
GMT, up $0.85 an ounce from New York's notional close on
Tuesday, when it fell as low as $1,074.10 -- its lowest level
since early November.
"I wouldn't want to go against the trend. It is still very
bearish right now," said Wong Eng Soon, an investment analyst
at Phillip Futures in Singapore.
"This correlation with the U.S. dollar seems to be one of
the most important factors right now," said Wong, who pegged
bullion's key support at November's lows around $1,055 an
ounce.
The dollar gained after a surprisingly strong 7.4 percent
rise in existing U.S. home sales last month offset a
sharper-than-expected downward revision to U.S. third-quarter
growth. []
The dollar hit a two-month high at 91.86 yen <JPY=>, while
the euro was on the defensive at $1.4250 <EUR=>, having tumbled
as low as $1.4216 on Tuesday after a third credit downgrade of
Greece. []
In theory, a firm dollar reduces gold's appeal as an
alternative investment and makes dollar-priced bullion more
expensive for holders of other currencies.
U.S. gold futures for February delivery <GCG0> fell $1.0 an
ounce to $1,085.7 after hitting a seven-week low at $1,075.20
an ounce on the New York Mercantile Exchange on Tuesday.
Trading was thin, with many fund managers and dealers
already out on holiday, making bullion prone to sharp
movements.
"The holiday mood is really in. We've been watching
movements of the dollar. That's all," said Ronald Leung,
director of Lee Cheong Gold Dealers in Hong Kong.
"I would say investors are on the sidelines after seeing a
big drop in prices," said Leung, adding that gold was expected
to trade in a $5 range before London markets reopen.
The world's largest gold-backed exchange-traded fund, SPDR
Gold Trust <GLD>, said its holdings stood at 1,132.708 tonnes
as of Dec. 22, unchanged from the previous business day.
[]
Premiums for gold bars in Asia jumped to their highest
level in months after a drop in bullion prices spurred buying
from investors and jewellers. []
PRICES
Precious metals prices at 0537 GMT
Metal Last Change Pct chg Day ago pct MA 30
RSI Spot gold $1084.40 $0.85 +0.08% +20.89% $860.10
37
Spot silver $16.94 -$0.02 -0.12% +41.40% $11.29
38
Spot plat $1390.50 -$2.50 -0.18% -1.70% $1438.66
42
COMEX gold $1085.80 -$0.20 -0.02% -0.88% $1143.44
36
Currencies
Euro/dlr $1.425 -$0.003 -0.21% -0.34%
Dlr/yen 91.67 0.52 +0.57% +1.51%
(Editing by Michael Urquhart)
