SINGAPORE, Jan 16 (Reuters) - Spot gold traded steady
on Monday, weighed down by a strong dollar after mass downgrades
of euro zone nations by Standard & Poor's on Friday, while its
safe haven appeal could benefit from renewed fears about the
euro zone debt crisis.	
    Gold posted its biggest one-day drop in 2-1/2 weeks on
Friday, as France and Austria were stripped of their coveted
trip-A ratings amid S&P's downgrades of nine euro zone nations,
and Greece's talks with creditor banks stalled. 	
    The single currency declined to its lowest since
August 2010 against the dollar, and was expected to remain under
pressure. 	
    "There are a lot of risks still ahead of us and we don't
think gold has priced in these risks," said Jeremy Friesen,
commodity strategist at Societe Generale. "It (the downgrades)
is one of the incremental pushes for gold to appreciate."	
    Gold's climb will face the headwind of a strong dollar, but
the appreciation of the greenback may not last long, he added.	
    Spot gold was little changed at $1,640.31 an ounce by
0314 GMT, flirting with the 200-day moving average just below
$1,638. 	
    Prices rallied nearly 5 percent this year, boosted by safe
haven bids on troubles in the euro zone and tension between Iran
and the West over the past two weeks.	
    U.S. gold gained 0.6 percent to $1,641.20.	
    Technical analysis suggested that spot gold could retreat to
$1,600 during the day, said Reuters market analyst Wang Tao.
 
 	
    	
    
    The advance in gold prices has yet to impress hedge funds
and other speculators.	
    Money managers cut bullish exposure in U.S. gold futures and
options in the week ended Jan.10, leaving the net length
 at its lowest level in nearly two years, according
to data from the U.S. Commodity Futures Trading Commission. 
 	
    Holdings of physically backed exchange-traded funds --
another gauge of investment interest -- showed little sign of
revival. SPDR Gold Trust, the world's largest gold ETF,
said its holdings stood at 1,254.159 tonnes, down 0.411 tonnes
from the end of 2011. 	
    Traders expect some selling from China this week, before
markets in the country close for a week-long Lunar New Year
holiday next week.	
    "We may see some pressure from some Chinese investors who
want to close their positions and lock down profits before they
close shop for the holiday," said a Shanghai-based trader.	
    Gold jewellery demand in India, a major global market, is
estimated to have risen 5 to 7 percent in 2011 and is set to
grow a further 10 to 15 percent this year with bullion prices
falling back after recent gains, the head of India's biggest
jewellery retailer said on Sunday.  	
      Precious metals prices 0314 GMT

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