* Bargain hunting seen emerging below $1,100
* SPDR Gold holdings unchanged
By Miho Yoshikawa
TOKYO, Dec 10 (Reuters) - Gold edged above $1,130 an ounce on
Thursday, recovering from an over three-week low, as a dip in the
dollar prompted some buying, although the precious metal remained
vulnerable to further profit-taking selling.
A combination of central bank buying, inflation worries and a
weaker dollar have encouraged investors to pile into gold,
lifting the precious metal to a record high of $1,226.10 on Dec.
3.
Bullion plunged the next day after better-than-expected U.S.
jobs data triggered a rally in the dollar. It fell to a trough
of $1,116.80 on Wednesday, the lowest since Nov. 13.
The market is leaning towards risk aversion due in part to
worries over sovereign debt in Spain and Greece, which had caused
sentiment to deteriorate, said Shuji Sugata, Mitsubishi Corp
Futures' research team manager.
"A deterioration in sentiment and the accompanying feeling of
uncertainty would usually be supportive for gold, but there was a
lot of speculative buying that boosted gold as it rose towards
$1,200," he said.
"Those long positions are being liquidated now," he said.
Greece vowed on Wednesday to do whatever it takes to check
its vast deficit but took yet another beating on markets, as EU
partners piled pressure on Athens to take action after its rating
was cut to its worst in a decade. []
Spot gold <XAU=> was up 0.3 percent at $1,132.40 an ounce as
of 0258 GMT, compared with New York's notional close of
$1,128.80.
U.S. gold futures for February delivery <GCG0> rose 1.1
percent to $1,132.70 an ounce from $1,120.90 on NYMEX.
Analysts said gold could be in a for a further decline in the
short term.
Investec Bank (Australia) said in a report: "Gold's decline
has been intensified by many fund and institutional players
unwinding positions ahead of year-end.
"We feel that given the usual thin liquidity at this time of
year it is possible that gold could see a sell-off taking it
closer to $1,000 by year-end as investors rush to take profits
and wait for the new influx of monies in the New Year," it said.
Sugata at Mitsubishi said: "Gold's adjustment is steeper
compared to other markets because it has been overperforming."
But he expects bargain-hunting to emerge should it fall below
$1,100.
The euro <EUR=> pared some of the losses made earlier this
week as a bout of profit-taking ahead of the year-end waned.
[]
The world's largest gold-backed exchange-traded fund, SPDR
Gold Trust <GLD>, said its holdings stood at 1,116.247 tonnes as
of Dec. 9, unchanged from the previous business day. []
PRICES
Precious metals prices at 0256 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 1132.40 3.60 +0.32 28.66
Spot Silver 17.42 0.04 +0.23 53.89
Spot Platinum 1415.00 -1.50 -0.11 51.82
Spot Palladium 362.00 0.00 +0.00 96.21
TOCOM Gold 3223.00 3.00 +0.09 25.26 61138
TOCOM Platinum 4021.00 9.00 +0.22 51.62 8084
TOCOM Silver 500.30 -4.20 -0.83 56.69 724
TOCOM Palladium 1035.00 -9.00 -0.86 88.18 183
Euro/Dollar 1.4738
Dollar/Yen 88.25
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Reporting by Miho Yoshikawa; Editing by Michael Watson)
