PRECIOUS-Gold rises 1.5 pct as dollar falters

                                
 * Dollar dips, easing from three-month highs
                                
 * Bear trend in near term, but spike up possible in thin mkt
                                
 
                                
 (Recasts, updates prices and comments, previous TOKYO)
                                
 By Humeyra Pamuk
                                
 LONDON, Dec 24 (Reuters) - Gold prices rallied more than 1.5
percent on Thursday to above $1,100 an ounce as the dollar lost
ground and on the back of robust investment flows betting on
higher bullion prices.
                                
 Other precious metals took their cue from gold's strength
with both palladium and platinum rallying to their highest in
about a week at $375 an ounce and $1,4560.50 an ounce
respectively.
                                
 Spot gold <XAU=> was at $1,104.05 an ounce by 1035 GMT,
versus $1,087 an ounce late in New York on Wednesday. Bullion
tumbled to a seven-week low of $1,074.10 an ounce earlier this
week.
                                
 Analysts said the price moves were partly exaggerated due to
low liquidity because of the Christmas holiday period, but the
fundamentals which sent gold to an all-time high of $1,226.10 an
ounce in early December were also still in place.
                                
 "Gold's rising because of a weaker dollar," said Daniel
Smith, analyst at Standard Chartered. "But also the recent
sell-off was a bit overdone as a lot of the factors that
supported gold are still in place," he said.
                                
 The dollar dipped, coming off three-month highs against a
basket of currencies after weak U.S. housing data the previous
day dampened optimism about the outlook for the U.S. economy.
[FRX/]
                                
 A weaker dollar makes gold cheaper for non-U.S. investors
and boosts its appeal as an alternative asset.
                                
 At current levels, bullion was set to post its biggest
one-day percentage gain in more than three weeks.
                                
 "Investor flows have held up pretty well. Physical demand in
places like India has been strong and I think that's going to be
supportive of the prices," Smith said, adding he expected a
volatile trade due to holiday-thinned liquidity.
                                
 U.S. gold futures for February delivery <GCG0> rose 1.1
percent to $1,106.40, compared to $1,094.00 an ounce on the
COMEX division of the New York Mercantile Exchange. Futures also
hit a 7-week low of $1,075.20 on Tuesday.
                                
 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. 23, unchanged from the previous business day and staying
just below a record high of 1,134.03 tonnes hit on June 1.
[GOL/SPDR]
                                
 The world's largest silver-backed exchange-traded fund,
iShares Silver Trust <SLV>, said its silver holdings stood at
9,492.97 tonnes as of Dec. 23, unchanged from the previous
business day, after easing from a record high of 9,514.35 tonnes
on Dec. 22. [ID:nTOE5BM04Y]
                                
 Among other precious metals, spot silver <XAG=> was bid at
$17.30 an ounce against $17.09. Platinum <XPT=> was at $1,454 an
ounce against $1,418.50, while palladium <XPD=> was at $374
against $355.50.
                                
(Additional reporting by Chikako Mogi, Editing by Keiron
Henderson)