(Updates prices)
By A. Ananthalakshmi
SINGAPORE, Nov 26 (Reuters) - Gold hovered close to its
lowest in nearly six years on Thursday, as the dollar held at
multi-month highs and U.S. economic data reinforced market
expectations of an interest rate hike this year.
Data on Wednesday showed that U.S. manufacturing output rose
well above economists' expectations in October, while business
spending plans surged. New applications for unemployment
benefits dropped last week.
Other data showed only a small increase in U.S. consumer
spending in October, but did little to alter views that the
economy was strong enough for the Federal Reserve to raise rates
at its next policy meeting in December.
Spot gold XAU= rose slightly to $1,072.70 an ounce by 0634
GMT, after dropping 0.4 percent on Wednesday. The metal dipped
to $1,064.95 last week, the lowest since February 2010.
The dollar index .DXY , a measure of strength against a
basket of major currencies, held near 100.17, an eight-month
high reached in the previous session, hurting gold.
"We are keeping an eye on the dollar as a possible catalyst
(for gold)," ScotiaMocatta analysts said in a note.
"The dollar index is within reach of the multi-year high of
100.39. A break of this level would put downside pressure on
gold with a break of $1,066 yielding initial $1,045, which is
the 2010 low," they said.
The 100.39 level, last reached in March this year, would be
the dollar index's highest since April 2003.
A stronger greenback makes dollar-denominated gold expensive
for holders of other currencies, while higher rates could dent
the appeal of non-yielding bullion.
Gold had seen some safe-haven bids earlier in the week after
Turkey downed a Russian fighter jet, stoking tensions between
the two countries, but have faded since as investors fretted
over the U.S. rate hike.
Any worsening of tensions could see investors seeking safety
in bullion. Russia sent an advanced missile system to Syria on
Wednesday to protect its jets operating there and pledged its
air force would keep flying missions near Turkish air space.
Liquidity is likely to be thin on Thursday as the U.S.
markets are shut for the Thanksgiving holiday.
In the physical markets, buying interest picked up as gold
prices stayed near multi-year lows.
Premiums on the Shanghai Gold Exchange, a proxy for demand
in top consumer China, were trading at a healthy $5-$6 an ounce
on Thursday, versus $3-$4 in the beginning of the month.
PRICES AT 0634 GMT
Metal Last Change Pct chg
Spot gold 1072.7 1.69 0.16
Spot silver 14.22 0.07 0.49
Spot platinum 849 10.26 1.22
Spot palladium 555.97 1.72 0.31
Comex gold 1072.4 2.4 0.22
Comex silver 14.21 0.052 0.37
COMEX gold and silver contracts show the
most active months