PRECIOUS-Gold firms; investors eye Fed decision, German ruling

* Gold ETF holdings hit record high
* Spot gold faces resistance at $1,739/oz - technicals
* Coming up: U.S. ICSC chain stores, weekly; 1145 GMT

(Updates prices)
By Rujun Shen
SINGAPORE, Sept 11 (Reuters) - Gold edged higher on Tuesday,
paring losses from the previous session, with investors awaiting
a key German ruling on the euro zone's bailout fund and a U.S.
Federal Reserve decision on possible measures to stimulate the
economy.
Gold has rallied nearly 7 percent over the past month on the
European Central Bank's bond-buying plan and expectations that
the Fed would launch another round of quantitative easing, or
QE3, at this week's meeting of its policy-setting wing.
Easy monetary policy benefits gold, which attracts investors
worried about potential inflation risks associated with cash
printing by central banks.
The chances of a QE3 announcement this week have jumped
after disappointing U.S. employment data, which pushed up spot
gold on Friday to above $1,740 for the first time since the end
of February.
"Investors have become very enthusiastic about gold, as well
as silver judging by ETF holdings and COMEX positions," said Li
Ning, an analyst at Shanghai CIFCO Futures. "Gold may continue
to fluctuate at these elevated levels, with $1,700 providing
short-term support."
Holdings of gold-backed exchange-traded funds
rose to an all-time high of 72.492 million
ounces on Monday.
Spot gold had gained 0.2 percent to $1,727.91 per
ounce by 0630 GMT, after dropping 0.6 percent on Monday.
U.S. gold was little changed at $1,730.40.
Speculators raised their net long positions in U.S. gold
futures and options to the highest level in more than six months
in the week ended Sept. 4, while silver net length had risen for
six straight weeks.
Technical analysis suggested that spot gold faces resistance
at $1,739 and may retrace to $1,711 during the day, Reuters
market analyst Wang Tao said.

A German constitutional court will rule on Wednesday whether
Germany can contribute to the European rescue fund, which plays
a crucial role in the European Central Bank's plan to fight the
region's debt crisis.
Scrap continued to flow into Asia's physical gold market as
prices remained buoyed by market expectations for more stimulus
measures.
"There is a lot of scrap and even some buying as some expect
prices to go higher," said a Singapore-based dealer, adding that
the premium on gold bars in Singapore stood at 20 to 40 cents
per ounce above London spot prices.
Platinum group metals also firmed, after hitting multi-month
highs in the previous session, supported by ongoing labour
problems in South Africa's mining sector and decent China auto
sales data.
Spot palladium edged up 0.2 percent to $664.47, after
hitting a four-month high of $670.50 on Monday. Spot platinum
also gained 0.2 percent, to $1,591.75, retreating from a
five-month high of $1,603.50 hit in the previous session.
In industry news, China, the world's top gold producer,
churned out 31.3 tonnes of the precious metal in July, bringing
total output in the first seven months of the year to 208
tonnes, up 7 percent year on year.

Precious metals prices 0630 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1727.91 3.12 +0.18 10.49
Spot Silver 33.38 0.08 +0.24 20.55
Spot Platinum 1591.75 2.75 +0.17 14.27
Spot Palladium 664.47 1.57 +0.24 1.83
COMEX GOLD DEC2 1730.40 -1.40 -0.08 10.44 15385
COMEX SILVER DEC2 33.43 -0.20 -0.60 19.76 5042
Euro/Dollar 1.2766
Dollar/Yen 78.21
COMEX gold and silver contracts show the most active months

(Editing by Chris Lewis and Himani Sarkar)