PRECIOUS-Gold above $1,590/oz on hopes of continued euro zone QE
* ETFs liquidition continues but at slower pace
* China's physical gold demand robust
* Stock markets hold near highs
(Updates throughout, changes dateline from SINGAPORE)
LONDON, March 12 (Reuters) - Gold rose above $1,590 an ounce on Tuesday, gaining nearly one percent following comments by an ECB official that eurozone inflation pressures are abating, which was viewed as an indication of continued monetary easing.
Accommodative monetary policies favour gold as low interest rates encourage investors to put money into the non-interest-bearing assets.
The metal started the day on a firmer tone, supported by some physical buying in Asia, but a stronger dollar and continued redemptions in gold-backed exchange-traded funds kept prices in check.
Spot gold rose 0.8 percent to $1,593.30 an ounce by 1145 GMT, breaking above the $1,560 and $1,585 range in which had been confined since the start of March.
U.S. gold futures for April delivery were up 0.2 percent at $1,581.80.
"More than 6,000 lots went through the market in a matter of minutes...the market has seen the $1,590-$1,592 level as a strong resistance and there has been some short-covering there," Standard Bank analyst Walter de Wet said.
Gold slid to a two-week low of $1,560.80 on Friday on signs of improving economic conditions in the United States.
"It may be that the comments of Jens Weidmann made the market move ...if we manage to push the market convincingly through $1,592, we may see a push towards $1,600 and until the New York market opens we should stay around current levels."
ECB policymaker Jens Weidmann said that inflation pressure is easing, suggesting that the central bank will continue its accommodative monetary policy, traders said.
In wider markets, the dollar was broadly firmer against a basket of major currencies, having hit a seven-month high on Friday, while European shares consolidated near 4-1/2 year highs.
The Dow industrial average hit a record high for the fifth consecutive session on Monday.
Holdings of SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, dropped to a new lowest since October 2011 at 1,236.729 tonnes on March 11, from 1,236.739 in the previous session.
Analysts, however, said that the pace at which ETFs investors exit their positions has been easing in the past week, when 21.9 tonnes were liquidated. This compared to a 56.7-tonne loss in the previous week, according to Standard Bank.
With major macro economic data lacking during the week, the next macro event is U.S. consumer inflation data on Friday, which is likely to provide some trading direction, analysts said.
Markets were monitoring the U.S. budget crisis, which some see as a threat to the nascent recovery in the world's top economy, as well as the troubles in the euro zone, due to Italy's political uncertainty.
PHYSICAL DEMAND IN ASIA
Physical buying continued in Asia, also spurred by comments from Kikuo Iwata, nominee to the Bank of Japan's deputy governor role, reiterating that the central bank must boost the quantitative easing as part of its 'bold' monetary policy aimed at ending years of deflation.
Average daily trading combined volumes on the three main gold contracts on the Shanghai Gold Exchange in the first two months of the year rose 24 percent on the year, according to Reuters calculations.
Among other precious metals, spot palladium fell 0.7 percent to $770.50 an ounce, off Friday's peak at $784.50, its highest since September 2011.
Platinum fell 0.2 percent to $1,589.99. Silver was up 0.1 percent to $28.97. Holdings of the biggest silver ETF iShares Silver Trust stood unchanged at 10646.48 tonnes in the previous session.
(Additional reporting by Rujun Shen; editing by Keiron Henderson)