Gold lingers around $1,200, taper worries remain

SINGAPORE (Reuters) - Gold held steady on Monday after its biggest weekly loss in a month, but the metal was still at the risk of falling back below $1,200 an ounce as investors fretted over the impact of a U.S. stimulus tapering.

Prices were supported in thin Asian trading as holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 5.40 tonnes to 814.12 tonnes on Friday - the first inflow since November 5.

"There seem to be subtle shifts in sentiments for more bullishness after $1,200 was broken," said Joyce Liu, an investment analyst at Phillip Futures Pte Ltd.

"However, the upside is limited due to year-end holiday season and with prices now treading close to $1,200, a break below that level may shift market sentiments back to bearishness."

Spot gold eased 0.1 percent to $1,201.25 an ounce by 0328 GMT. It rose 1 percent on Friday on short covering after losing 4 percent in the previous three sessions.

Gold fell 3 percent last week after the Fed said the U.S. economy was strong enough to scale back its massive bond-buying stimulus, winding down an era of easy money that saw gold rally to an all-time high of $1,920.30 an ounce in 2011.

The metal has fallen nearly 30 percent this year on fears that a scale back of stimulus would hurt its inflation-hedge appeal.

The decline this year is gold's biggest fall in 32 years.

Physical demand picked up in Asia as prices fell towards $1,200 last week but not to the same level seen during earlier price drops this year. Volumes traded on the Shanghai Gold Exchange on Monday were lower than last week's as buyers waited to see if prices could drop further. Premiums remained stable at $16 an ounce.

(Reporting by A. Ananthalakshmi; Editing by Richard Pullin aand Michael Perry)