* Spot gold may rise towards $1,292 - Technicals
* SPDR Gold holdings up 0.34 percent on Tuesday
* Stronger physical demand offset steady dollar
(Updates prices)
By Apeksha Nair
Oct 26 (Reuters) - Gold prices stayed firm on Wednesday as
stronger physical demand for the precious metal, ahead of
India's late-October festival season, offset a steady U.S.
dollar.
Demand for bullion is expected to pick up ahead of festivals
such as Dhanteras and Diwali, which is also a time when gold is
traditionally given as a gift.
"A recovery in physical demand provided the foundation for
the rally that carried over into later trading," HSBC analyst
James Steel said in a note.
"Gold investors brushed aside the negative impact on bullion
of a firmer USD."
Spot gold was up about 0.1 percent at $1,275.00 an
ounce by 0655 GMT. In the previous session, it hit $1276.67, its
highest since Oct. 5.
U.S. gold futures settled up 0.16 percent at
$1,275.6 an ounce.
Flows into exchange-traded funds and pick up in Asian demand
were keeping the metal stable, said Dominic Schnider of UBS
Wealth Management in Hong Kong.
"Markets having already priced in the Fed's interest rate
hike move," Schnider added.
"Yellen may hike rates now, but the trajectory is going to
be very modest, and so interest rates in the U.S. in real terms
will actually go down into more negative territory," he added.
A Reuters poll showed the Federal Reserve is expected to
raise interest rates in December.
Bank of England Governor Mark Carney cast doubt on
expectations for more monetary stimulus in Europe while ECB
President Mario Draghi said on Tuesday he would prefer not to
have to keep rates so low for too long.
Holdings of the SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, rose 0.34 percent to 956.83
tonnes on Tuesday from 953.56 tonnes on Monday.
"The extreme longs on Comex have been reduced significantly
providing upside support for the yellow metal and potential for
another assault on $1,300," MKS PAMP Group trader Jason Cerisola
said.
Spot gold may rise towards $1,292 per ounce, having cleared
a resistance at $1,273, according to Reuters technical analyst
Wang Tao.
"For the remaining of 2016, the suspense given the U.S.
presidential election alone should be enough to support gold
prices," OCBC analysts said in a note.
Silver was flat at $17.78 an ounce.
Platinum climbed 0.45 percent to $967.50 an ounce,
while palladium rose 0.63 percent to $637.00.
(Reporting by Apeksha Nair and Nallur Sethuraman in Bengaluru;
Editing by Joseph Radford and Sherry Jacob-Phillips)