* Euro gains vs the dollar after U.S. housing data
* Physical buying re-emerges in Europe as prices subside
* SPDR ETF holdings unchanged in New York
(Recasts, updates prices and comments)
By Jan Harvey
LONDON, Dec 23 (Reuters) - Gold rose nearly 1 percent on
Wednesday, bouncing off from a seven-week low struck in the
previous session as the dollar lost ground and physical demand
offered some support to prices.
But with the year-end looming and investors keen to square
their positions, bullion could struggle to climb any further,
especially with pockets of dollar strength, traders said.
Spot gold <XAU=> was bid at $1,092.20 an ounce at 1553 GMT,
against $1,083.55 late in New York on Tuesday, when it tumbled
to $1,074.10 an ounce, its lowest since November 3.
"The metal could increasingly get restricted to a narrower
range as we proceed towards the year-end," said Pradeep Unni,
senior analyst at Richcomm Global Services.
"Book closing and weak physical demand, combined with the
selling pressure building up in charts are restricting fresh
investments," he said. "A year-end price closing in the range of
$1,050-1,055 is quite likely."
The dollar fell further against the euro and yen after data
showing U.S. new home sales fell to a seven-month low in
November dented optimism about the economy. []
Weakness in the U.S. unit boosts gold's appeal as an
alternative asset and makes dollar-priced commodities cheaper
for holders of other currencies.
Afshin Nabavi, head of trading at MKS Finance, said many
speculative investors were getting out of the market as the end
of the year approached, with thin trade exaggerating price
moves. But 2010 could bring a recovery, he added.
"Selling seems to be coming from specs liquidating their
positions, and if it hadn't been for physical demand, the market
would have been much, much lower," he said.
"It is very difficult to have an opinion for the next few
days, but I remain positive towards the price of gold in the
coming year. Once everyone is back in their seats, we will see
prices head back towards where they were earlier this month."
Spot gold rose to an all-time high of $1,226.10 an ounce at
the beginning of December.
OIL FIRMS
Other commodities also held firm, with oil prices holding
near $75 a barrel after industry data showed a sharp drawdown in
U.S. crude stocks. Gold tends to track crude prices, as the
metal can be bought as a hedge against oil-led inflation. []
If gold declines further it will likely find initial support
around $1,060-$1,065, traders said, having shed 11.5 percent
since early December's record high. If this breaks, it could
lead to a further correction, analysts said.
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. 22, unchanged from the previous business day. []
London's ETF Securities said holdings of its gold-backed
exchange-traded products fell half a percent to 7.778 million
ounces on Tuesday from 7.821 million ounces the day before.
India's spot gold prices fell for a second consecutive
session on Wednesday as buyers stayed away expecting prices to
fall further, dealers said. India was the world's biggest
bullion consumer last year. []
U.S. gold futures for February delivery <GCG0> on the COMEX
division of the New York Mercantile Exchange firmed $6.2 to
$1,092.90 an ounce.
Spot silver <XAG=> was bid at $17.12 an ounce against
$16.96. Platinum <XPT=> was at $1,405 an ounce against $1,393,
while palladium <XPD=> was at $357 against $352.50.
(Reporting by Jan Harvey; Editing by William Hardy)
