Gold holds gains on geopolitical tensions but US rate view drags

SINGAPORE (Reuters) - Gold clung to overnight gains on Wednesday on a softer dollar and heightened tensions after Turkey shot down a Russian warplane, but the metal wasn't too far from a near-six-year low on fears the Federal Reserve will hike U.S. rates next month.

FUNDAMENTALS

* Spot gold > edged up 0.1 percent to $1,076.16 an ounce by 0034 GMT, following a 0.6 percent gain on Tuesday. U.S. gold had also gained nearly 1 percent in the previous session.

* Bullion benefited from safe-haven bids after Turkey shot down a Russian warplane near the Syrian border on Tuesday, saying the jet had violated its air space, in one of the most serious publicly acknowledged clashes between a NATO member country and Russia for half a century.

 

* U.S. President Barack Obama and French President Francois Hollande, meeting in Washington, urged against an escalation, while NATO Secretary-General Jens Stoltenberg said the military alliance stood in solidarity with Turkey.

* The tensions prompted a dip in equities and the dollar, while boosting safe-haven yen, gold and government debt.

* The Tuesday gains should provide short-term relief to gold prices, which last week had fallen to $1,064.95, the lowest since February 2010.

* The metal has been under pressure on increasing expectations that the Fed would raise U.S. interest rates for the first time in nearly a decade in December.

* Gold tends to benefit from ultra-low U.S. rates, which cut the opportunity cost of holding non-yielding bullion.

* Data on Tuesday supported views of a December rate hike. The U.S. economy grew at a healthier clip in the third quarter than initially thought.

* Traders will be eyeing more U.S. data due today, including weekly jobless claims and October new home sales, to gauge the strength of the economy.

* The U.S. Mint said on Tuesday that it had sold out of all remaining 1-ounce American Eagle gold bullion coins dated 2015 after weak prices buoyed demand.

* Chow Tai Fook Jewellery Group Ltd <1929.HK>, China's largest jewellery retailer by market value, said its first-half net profit fell 42 percent on the back of sluggish spending in Hong Kong and Macau, and disappointing sales of gold products.

DATA AHEAD (GMT)

0745 France Consumer confidence Nov

1330 U.S. Personal income Oct

1330 U.S. Durable goods orders Oct

1330 U.S. Weekly jobless claims

1400 U.S. Monthly home price index Sep

1500 U.S. New home sales Oct

(Reporting by A. Ananthalakshmi; Editing by Michael Perry)