* Dollar near 7-month high as Fed may raise rates in Dec
* ECB move to expand stimulus to lift dollar, weigh on gold
(Updates throughout, changes dateline from MANILA)
By Clara Denina
LONDON, Nov 10 (Reuters) - Gold was mired near a three-month
low on Tuesday as the dollar edged towards a seven-month peak on
prospects the U.S. Federal Reserve will raise interest rates for
the first time in a decade in December.
A forecast-beating U.S. October employment report on Friday
pushed up bets the Fed will increase rates, sending
non-interest-paying gold to $1,084.90 an ounce, the lowest level
since August.
Spot gold XAU= was up 0.1 percent at $1,092.55 an ounce by
1059 GMT, while U.S. gold for December delivery GCcv1 gained
$4.40 to $1,092.50 an ounce.
Although bullion ended an eight-day losing run on Monday,
the technical picture has weakened and the next support is set
at the 5-1/2-year trough of $1,077 hit in July, analysts said.
"A lift-off by 25 basis points in December is pretty token
but it is the first interest rate hike in almost a decade and
the market is prepared for this," Mitsubishi Corp strategist
Jonathan Butler said.
"It's very possible we are going to see a breach of the
$1,077 support ... particularly if the ECB starts to expand
their quantitative easing programme in December, then we may see
some further strength in the dollar."
The dollar was up 0.1 percent against a basket of
currencies, close to a seven-month peak hit on Friday after the
U.S. jobs data. FRX/
The U.S. currency was strong against the euro after four
governing council members said a consensus is forming at the
European Central Bank to take one of its benchmark interest
rates deeper into negative territory in December. The ECB last
month raised the prospect of more monetary easing at its Dec. 3
meeting to combat ultra-low inflation.
After a potential rate hike in December, the U.S. central
bank may take its time in raising rates further which should be
broadly supportive for gold, said INTL FCStone analyst Edward
Meir.
But Meir said the metal faces more weakness in the near term
and "poor technicals and a buoyant dollar do not help gold's
upside case much either".
Among other precious metals, spot platinum XPT= fell 0.1
percent to $909.25 an ounce after hitting a one-month low of
$904.75 in the previous session. Palladium XPD= gained 1.9
percent to $607.25 an ounce, partially recovering a 4-percent
percent fall to $592.50 an ounce on Monday, its lowest in seven
weeks. Silver XAG= slipped 0.3 percent to $14.47.