PRECIOUS-Gold edges up after 2-day drop on weaker dollar, steadier oil

* Crude oil holds above 11-year lows
* Coming up: U.S. Weekly jobless claims at 1330 GMT

(Updates prices)
By Clara Denina
LONDON, Dec 24 (Reuters) - Gold rose on Thursday, snapping
two days of losses, as the dollar softened ahead of the
Christmas holiday break, and a recovery in oil prices helped
sentiment.
Spot gold XAU= rose 0.2 percent to $1,072.70 an ounce by
1251 GMT, after losing 0.7 percent in the last two sessions.
Many financial centres will shut early on Thursday and stay
closed on Friday for the Christmas holiday. Some will remain
shut on Monday.
Bullion prices have shed 9 percent so far this year, a third
year of losses, mostly due to expectations the U.S. Federal
Reserve would raise interest rates, which it did this month.
"Leading into this rate hike, there was a lot of negative
sentiment but now that's rebalancing, which is price supportive
in the short term," Julius Baer analyst Warren Kreyzig said.
"But when people start to focus on the fundamentals of low
inflation, economic growth in the U.S., the impact on gold will
be bearish again," Kreyzig added.
With the first U.S. rate increase in nearly a decade out of
the way, the focus is now on the pace of future hikes, analysts
said.
Higher rates dent demand for non-interest paying gold, for
which the outlook remains largely on the downside, with many
predicting a drop below $1,000 by the end of next year.
The dollar slipped 0.3 percent against a basket of leading
currencies, down for a fourth session out of five after recent
mixed U.S. data. FRX/
New orders for U.S. manufactured capital goods fell in
November and the prior month's increase was revised sharply
lower, while other data showed consumer sentiment at a
five-month high in December and personal income rising for an
eighth straight month in November.
A softer dollar makes gold cheaper for foreign investors.
In other markets, crude prices LCOc1 steadied above $37 a
barrel, a fourth day of gains after hitting a lowest since early
2009 on Monday. O/R
Gold is positively correlated to oil as the metal is seen as
a hedge against oil-led inflation.
"If oil continues to rally we think this would eventually
feed into real gains for gold prices," HSBC said in a note.
Silver XAG= rose 0.2 percent to $14.32 an ounce, while
palladium XPD= gained 1.2 percent to $555.47 and platinum
XPT= was up 0.4 percent at $871.60.