Gold pares gains after US data, vulnerable to more losses

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Gold was little changed on Tuesday, paring earlier gains after strong U.S. growth data lifted the dollar, and was looking vulnerable to more losses as appetite for risk boosted equities.

The U.S. economy grew at a 5 percent clip in the third quarter, its quickest pace in 11 years and the strongest sign yet that growth has decisively shifted into higher gear.

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"It is still a dollar story that moves the market, good U.S. economic data... and that's likely to persist in the new year," ActivTrades senior analyst Carlo Alberto de Casa said.

Spot gold was last flat at $1,174 an ounce after rising to a session high of $1,185. It tumbled nearly 2 percent on Monday to its lowest since Dec. 1 at $1,170.17.

U.S. gold futures for delivery in February settled down 0.2 percent at $1,178.00 an ounce.

Liquidity was thin due to the Christmas holiday on Thursday, while Japanese markets were closed on Tuesday for a public holiday.

U.S. and European shares rose, with the Dow industrials topping 18,000 for the first time as the report on U.S. economic growth supported risk appetite and lifted oil prices.

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The dollar was up 0.3 percent versus a basket of currencies to the highest since April 2006. A stronger greenback makes dollar-denominated gold more expensive for holders of other currencies.

Bullion found support in the physical markets, where bargain hunters in top consumer China emerged after the price drop on Monday.

Prices on the Shanghai Gold Exchange rose to a premium of up to $5 an ounce over the global benchmark, compared with $2-$3 in the previous session.

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Data from the International Monetary Fund showed that Russia raised its gold reserves for an eighth month in a row in November, while Ukraine reduced bullion holdings for a second straight month.

"We still see lots of bears in the woods and as to rumors of Russians selling, they actually added to holdings," George Gero, precious metals strategist for RBC Capital markets in New York, said in a note.