* Position closing before Xmas, year-end caps gold prices
* Some cenbank moves to tighten liquidity dampen sentiment
* SPDR gold holdings steady
By Chikako Mogi
TOKYO, Dec 11 (Reuters) - Gold prices rose towards $1,140 an
ounce on Friday as the dollar steadied after snapping a four-day
losing streak the day before, when investors returned to buy
bullion following its fall from record highs hit last week.
Spot gold marked a one-month low below $1,120 per ounce
earlier this week and looks set for a weekly loss of 2.4 percent
if prices stay at current levels, which put it 8 percent below
the record high reached last week.
Heightened jitters about sovereign credit problems helped
accelerate and intensify seasonal selling pressures when
investors typically close positions before Christmas and the
year-end.
Moves by some central banks to start absorbing extra
liquidity pumped into the banking system in the wake of the
global financial crisis last year were also weighing on
sentiment.
"Investors are taking profits and closing positions before
Christmas and the year-end as gold prices remain at elevated
levels and this activity is likely to continue for now," said
Kazuhiko Saito, chief analyst at Fujitomi Co in Tokyo.
"More importantly, there is a change in the structure that
has driven gold's rapid rally to record highs. There are moves to
take out excess liquidity, and considering that a lot of that
money had been flowing into gold, it would not be surprising to
see bullion coming under selling pressures," he said.
Spot gold <XAU=> edged up 0.6 percent to $1,136.40 an ounce
as of 0645 GMT.
U.S. gold futures for February delivery <GCG0> rose 1.0
percent to $1,137.60 an ounce, compared with $1,126.20 on the
COMEX division of NYMEX.
Gold rose on Thursday, snapping a four-session losing streak
as institutional investors and exchange-traded funds added
positions after bullion retreated from record highs last week.
A slew of closely watched Chinese data showed on Friday the
economy remains on a solid footing, raising the prospect for
Beijing to tighten its accommodative policy, analysts said.
Chinese industrial output growth in November jumped to its
strongest since June 2007, underlining the economy's brisk
recovery from the global downturn in response to massive fiscal
and monetary stimulus. Consumer price inflation also turned
positive in November in year-on-year terms after nine straight
months in negative territory. []
Wong Eng Soon, an investment analyst at Phillip Futures Pte
ltd, said: "The market is performing much better today ... and I
think one of the principle drivers is the release of the Chinese
national production figures this morning."
"They came out much better than the previous month, and they
were also ... higher than forecasts, and this may have provided
some upside in terms of the Chinese recovery story," he said.
Earlier in the week, New Zealand's central bank signalled it
may start raising rates in April, while South Korea's central
bank offered a clear signal it was ready to raise interest rates
as early as February.
The Europen Central Bank kept rates on hold last week, but
announced plans to start phasing out the extra liquidity
operations in which billions of euros in extra funds have been
pumped into the financial system since October last year.
As the gold market steadied, holdings at the world's largest
gold-backed exchange-traded fund, SPDR Gold Trust <GLD>, stayed
unchanged from the previous business day at 1,116.247 tonnes as
of Dec. 10. []
The fund posted its largest one-day percentage drop in about
five months on Dec. 8 when holdings fell 1.2 percent or 13.719
tonnes from the previous business day.
The dollar was steady against a basket of major currencies.
[]
PRICES
Precious metals prices at 0643 GMT
Metal Last Change Pct chg YTD pct chg Turnover
Spot Gold 1136.60 6.45 +0.57 29.14
Spot Silver 17.40 0.03 +0.17 53.71
Spot Platinum 1425.00 3.00 +0.21 52.90
Spot Palladium 363.00 0.50 +0.14 96.75
TOCOM Gold 3265.00 67.00 +2.10 26.89 82102
TOCOM Platinum 4088.00 86.00 +2.15 54.15 11417
TOCOM Silver 500.50 6.30 +1.27 56.75 445
TOCOM Palladium 1042.00 15.00 +1.46 89.45 332
Euro/Dollar 1.4730
Dollar/Yen 88.93
TOCOM prices in yen per gram, except TOCOM silver which is
priced in yen per 10 grams. Spot prices in $ per ounce.
(Additional reporting by Miho Yoshikawa; Editing by Joseph
Radford)
