* Gold steady after near 1 percent drop in previous session
* US housing data stirs fears of December tapering
* China's imports from Hong Kong highest in 7 months
(Adds comments, details on China demand) SINGAPORE, Nov 27 (Reuters) - Gold traded in a narrow range below $1,250 an ounce on Wednesday, as strong U.S. housing data stoked fears that the Federal Reserve would soon begin rolling back stimulus measures, and reduce gold's appeal as a hedge against inflation. Permits for future U.S. home construction marked a near 5-1/2 year-high in October and prices for single-family homes notched big gains in September - the latest signs of strength in the economy, which could prompt the Fed to reduce its monthly bond purchases of $85 billion soon. Economists polled by Reuters expect the U.S. central bank to begin tapering only in March, but gold prices are subdued as traders still see a risk that the Fed could begin tapering in December. "We still see some upward potential in the short to medium term as markets adjust tapering expectations," said Alexis Garatti, an economist at Haitong International Research in Hong Kong. However, technical analysts warned that as long as gold remains below $1,300 it faces the risk of further declines. Spot gold had ticked up 0.2 percent to $1,245.59 an ounce by 0401 GMT, after dropping 0.7 percent in the previous session. If bullion cannot close above a resistance level at $1,260 an ounce in the next few days, prices may fall back, analysts from Wing Fung Financial Group said in a note. The metal has fallen over 25 percent this year as investors pulled money out of bullion to invest in higher-yielding equities.
CHINA DEMAND China's net gold imports from Hong Kong hit the highest in seven months in October, data released on Wednesday showed, as the country bought more than 100 tonnes of gold for a sixth straight month to meet unprecedented demand for bullion.
China is set to overtake India as the biggest gold consumer this year. Rules introduced by India in mid-year curbed demand for gold -- the second largest single item on its import bill after oil. The Indian government took the steps in order to take pressure off the rupee exchange rate and reduce a worryingly high current account deficit. Chow Tai Fook Jewellery Group Ltd, the world's largest jewellery retailer by market value, posted a 92.3 percent rise in net profit for the six months ended in September, thanks to strong Chinese demand.
PRICES AT 0401 GMT
Metal Last Change Pct chg YTD pct chg Spot gold 1245.59 2.69 0.22 -25.62 Spot silver 19.89 0.06 0.3 -34.31 Spot platinum 1373.24 5.14 0.38 -10.54 Spot palladium 716.47 0.5 0.07 3.54 Comex gold Dec3 1245.9 4.5 0.36 -25.65 Comex silver Dec3 19.895 0.047 0.24 -34.36 Euro 1.3596 DXY 80.555
COMEX gold and silver contracts show the most active months
(Reporting by A. Ananthalakshmi; Editing by Joseph Radford and Simon Cameron-Moore)