* Gold holds decline from 3-day losing streak
* Dollar strength hurts
* Coming up: U.S. housing starts at 1230 GMT
(Updates prices)
By A. Ananthalakshmi
SINGAPORE, Oct 20 (Reuters) - Gold struggled after three
days of losses on Tuesday, hurt by a stronger dollar and fears
the Federal Reserve could still raise U.S. interest rates this
year.
Spot gold XAU= was trading at $1,171.75 an ounce by 0653
GMT, after losing about 1.2 percent in the past three sessions.
Gold touched a 3-1/2-month high last week on bets the Fed
would not raise U.S. rates amid concerns about the global
economy. But the rally lost steam after robust U.S. economic
data, and as gold failed to break past the key $1,200-level.
"There has been more uncertainty in recent days about the
timing of a rate hike, and that is not helping gold," said a
trader in Sydney. "We are just taking cues from the dollar."
The dollar was trading near its highest in over a week
against a basket of major currencies. A stronger greenback makes
gold expensive for holders of other currencies. USD/
"Technically, things aren't very good at the moment as we
broke below the 200-day moving average near $1,175," the trader
said.
Gold may break support at $1,168 and fall towards the next
support level at $1,155, said Reuters technicals analyst Wang
Tao. urn:newsml:reuters.com:*:nL3N12K15P
Investors have been frustrated by the mixed messages from
the U.S. central bank in recent weeks.
Fed Chair Janet Yellen and other officials have said they
expect a rate hike will be needed by the end of this year, but
two Fed governors last week urged caution. The Fed has kept
interest rates near zero for nearly seven years.
Despite strong headwinds from overseas that are holding down
U.S. inflation, the Fed should soon begin to raise interest
rates to slow economic growth before it becomes unsustainable,
San Francisco Fed President John Williams said on Monday.
urn:newsml:reuters.com:*:nL1N12J1MR
The Fed holds two more policy meets this year: next week and
in December. Market expectations for a rate hike have shifted to
next year in recent weeks, though some haven't completely ruled
out a hike in December.
"The key factor driving the (gold) price is the market's
expectations with respect to the Fed's first interest rate
hike," Commerzbank (DE:CBKG) analysts said in a note. "We only envisage a
sustained price rise once the uncertainty over the first rate
hike has dissipated."
It expects to see gold at $1,150 by the end of the year.
PRICES AT 0653 GMT
Metal Last Change Pct chg
Spot gold 1171.75 1.45 0.12
Spot silver 15.87 0.05 0.32
Spot platinum 1005 -4 -0.4
Spot palladium 681 -1.5 -0.22
Comex gold 1172.5 -0.3 -0.03
Comex silver 15.89 0.049 0.31
COMEX gold and silver contracts show the
most active months