* Euro recovers some lost ground after euro zone PMI data
* Traders take to the sidelines ahead of Fed announcement
* Gold demand in India abates as prices tick back up
(Updates, adds comment, changes dateline from TOKYO)
By Jan Harvey
LONDON, Dec 16 (Reuters) - Gold rose above $1,130 an ounce
on Wednesday after above-consensus euro zone data lifted the
euro from lows, but prices were rangebound amid caution ahead of
a Federal Reserve monetary policy statement due later.
Traders were also closely eyeing U.S. November consumer
price inflation data at 1330 GMT, after a higher-than-expected
reading of the producer price index on Tuesday sparked a price
rebound.
Spot gold <XAU=> was bid at $1,130.50 an ounce at 0930 GMT,
against $1,124.40 late in New York on Tuesday. U.S. gold futures
for February delivery <GCG0> on the COMEX division of the New
York Mercantile Exchange rose $8.80 to $1,131.80 an ounce.
Gold has managed to hold above $1,120 an ounce this session
as caution before the data helped it shrug off dollar strength.
"We have a mixture of psychological (support) and data
coming out in the United States and the euro zone," said
Wolfgang Wrzesniok-Rossbach, head of sales at precious metals
house Heraeus.
"From a technical point of view there is strong support only
at $1,095 and I wouldn't be surprised if the metal at some stage
actually tests that," he added. "But on the other hand, it seems
every time it comes below $1,120, we find speculative buying."
Speculative investors are attracted to what they perceive to
be the metal's good value after a $100 price retreat from record
levels over the last two weeks, traders said.
A slight recovery in the euro after euro zone services PMI
data is also helping the metal. Markit's Eurozone Flash Service
Purchasing Managers Index rose more than expected to 53.7 in
December, its highest since November 2007. []
A softer dollar versus the euro boosts gold's appeal as an
alternative asset and makes dollar-priced commodities cheaper
for holders of other currencies.
But the U.S. currency stayed near a 2-1/2-month high as
investors awaited the Fed policy statement for clues on when it
may begin winding down its loose monetary policy. []
DATA AWAITED
Traders are awaiting the release of the U.S. consumer price
index and other data included November housing starts at 1330
GMT, as well as the key Fed interest rate decision and monetary
policy announcement at 1915 GMT.
"The market will be looking out for any indications of an
earlier liquidity withdrawal or interest rate rises given recent
bullish U.S. data," VTB Capital analyst Andrey Kryuchenkov said
in a note.
"Perhaps it is too early to turn completely bullish on the
greenback, but sentiment is certainly improving."
Among other commodities, oil prices rose above $71 a barrel
after snapping a nine-day losing streak a day earlier. Gold
tends to track crude prices, as the metal can be bought as a
hedge against oil-led inflation. []
On the physical side of the market, India's gold demand
turned weak on Wednesday afternoon as traders sought lower
prices, after the offtake picked up slightly late in the
previous session, dealers said. []
Holdings of the SPDR Gold Trust <GLD>, the world's largest
gold-backed exchange-traded fund, were unchanged on Tuesday from
the previous session, it said. []
Among other precious metals, silver <XAG=> was at $17.43 an
ounce versus $17.41, platinum <XPT=> was at $1,442.40 an ounce
against $1,445.50 and palladium <XPD=> at $365 against $363.80.
(Reporting by Jan Harvey; Editing by Anthony Barker)
