* Gold rose more than 8 percent in 2016
* Short- to medium-term technical rally after Dec slip
(Updates prices, adds quote)
By Sethuraman N R
Jan 3 After gaining more than 8 percent in 2016,
gold extended its strong run into the New Year, pushed higher in
2017's first day of trading on Tuesday on technical buying,
despite a stronger dollar.
At 0641 GMT, spot gold was up 0.6 percent at
$1,158.10 per ounce, while U.S. gold futures rose 0.6
percent to $1,158.50.
"A technical rebound is just under way," said Jiang Shu,
chief analyst at Shandong Gold Group, after gold slipped in
December when solid U.S. economic data gave the Federal Reserve
confidence to raise rates for the first time in a year.
Gold is highly sensitive to rising rates, which lift the
opportunity cost of holding non-yielding assets such as bullion,
while boosting the dollar, in which it is priced.
"The market is waiting for (U.S.) non-farm payrolls data due
this Friday. If we have lower-than-expected data, it is a good
chance for gold to have a strong rebound," Shu said.
But looking further ahead, Shu expects U.S. interest rate
hikes this year to pressure gold.
"Any rise in the first quarter will be a medium-term
technical rebound and not a fundamentally driven long trend
rally," Shu said.
On Tuesday, the U.S. dollar held on to broad gains, resuming
its ascent after last week's brief wobble as the prospect of
rising U.S. interest rates this year kept sentiment bullish.
"Gold could reach $1,170 at the most until the non-farm
payroll data this week," a Singapore-based technical trader
"We need to see the non-farm for more direction. Although it
should be stable and not surprise much," he added.
The most active COMEX gold futures contract finished 2016 up
7.1 percent as compared to the end of 2015. The dollar index -
which measures the greenback against six major rivals - climbed
over half a percent.
Asian stocks began 2017 on a flat note on Tuesday,
uninspired by a surge in European markets to their highest in
more than a year, while the dollar resumed its climb after last
Hedge funds and money managers slashed their net long
positions in COMEX gold to a near 11-month low and trimmed
bullish bets in silver contracts in the week to Dec. 27.
SPDR Gold Trust, the world's largest gold-backed
exchange-traded fund, said its holdings fell 0.14 percent to
822.17 tonnes on Friday from Thursday.
In other precious metals news, spot silver rose 1
percent to $16.10 per ounce.
Platinum rose 0.7 percent to $905.95, while palladium
rose 0.3 percent to $680.70.
(Reporting by Nallur Sethuraman in BENGALURU; Editing by
Kenneth Maxwell and Sunil Nair)