* Investors eye Greece after credit rating downgrades
* U.S. gold futures rise
* SPDR holdings rise
(Updates prices, adds detail)
By Rebekah Curtis
LONDON, Dec 21 (Reuters) - Gold edged up on Monday after
recent multiweek lows, but gains were capped due to strength in
the dollar, which hovered near three-month highs.
Gold traded at $1,115.25 an ounce at 1241 GMT, versus
$1,112.25 an ounce late in New York on Friday when bullion rose.
Last week gold fell below a psychological support level of
$1,100 to a six-week low of $1,094.50, losing grip of a record
high above $1,226 hit on Dec. 3.
"It was so bullish and now it's been knocked back," Virtual
Metals analyst Matthew Turner said of gold, adding that
bullion's gains were being capped by the recent dollar rally.
The dollar dipped from earlier gains but held near 3-month
highs hit last week.
"It's the trend that matters," he said of the dollar's
strength lately. "If the dollar does recover it will hit the
gold price quite sharply."
A firmer dollar usually curbs gold's appeal as an
alternative investment and makes the precious metal more
expensive for holders of other currencies. <.DXY>
Concerns over debt problems in Dubai and Greece are helping
underpin the currency. [] Investors are keeping an
eye on Greece after two credit ratings agencies downgraded the
euro zone member this month on concerns about its fiscal health.
[]
Analysts see bullion prices stalling in the short-term due
to weak physical buying and as further dollar strength is
expected.
FUTURE'S GOLD
U.S. gold futures for February delivery <GCG0> inched up 0.4
percent to $1,116.2 per ounce, compared to Friday's settlement
of $1,111.50 an ounce on the COMEX division of the New York
Mercantile Exchange.
Noncommercial net long U.S. gold futures positions rose 0.7
percent to 256,108 lots in the week to Dec. 15 from 254,429
lots, a weekly report by the U.S. Commodity Futures Trading
Commission showed. []
The week-on-week rise was the first in three weeks.
Meanwhile, the world's largest gold-backed exchange-traded
fund, SPDR Gold Trust <GLD>, said its holdings stood at
1,126.611 tonnes as of Dec. 18, up 6.097 tonnes or 0.5 percent
from the previous business day. Holdings hit a record high of
1,134.03 tonnes on June 1. []
Silver was at $17.32 an ounce from $17.26 and platinum
<XPT=> was at $1,428 from $1,427.50. Palladium <XPD=> was at
$365.50 from $359.50.
"We now believe the probable year-end gold price will be
around $1,050," Commerzbank said in a note.
"The other precious metals, particularly silver, are likely
to follow in gold's wake, albeit with a wider volatility range,
and to ease in the next few days in the absence of any
significant upward pressure from the U.S. dollar."
(Editing by Keiron Henderson)
