PRECIOUS-Gold treads lower as dollar gains on stronger U.S. data

    * Spot gold could fall to $1,311/oz - Technicals
    * Falling digital currencies could support gold - analysts

 (Updates with quote, latest prices)
    By Nithin ThomasPrasad
    Jan 18 (Reuters) - Gold slipped on Thursday, hitting its
lowest in nearly a week, as the dollar edged higher from
three-year lows on stronger-than-expected U.S. economic data.
    Spot gold        was down 0.1 percent at $1,326.11 per ounce
as of 0726 GMT. Earlier in the session, it touched its lowest
since Jan. 12 at $1,323.70.
    In the previous session, it fell 0.8 percent, posting its
worst one-day percentage decline since Dec. 7.        
    U.S. gold futures         for February delivery slipped 0.9
percent to $1,326.60 per ounce.
    "The metal looks well supported at $1,325 (an ounce) and
below that we can expect plenty of buying interest ahead of
$1,300," said MKS PAMP Group trader Tim Brown in a note.
    "On the upside, first resistance should be at the four month
high of $1,344 and the $1,350 level after that." 
    U.S. industrial production increased more than expected in
December as unseasonably cold weather at the end of the month
boosted demand for heating, but manufacturing output barely
rose, pointing to moderate growth in the industrial sector. 
    "Technically, $1,326 will act as a support and holding that
could push prices to test $1,360-$1,364," said Amit Kumar Gupta,
portfolio management services head at Adroit Financial Services.
    Analysts said a correction in digital currencies could
support gold.
    "Brokers in Europe report investors have increasingly been
asking about switching from cryptocurrencies into gold," ANZ
analysts said in a research note.
    On Wednesday, bitcoin            fell more than 10 percent
to below $10,000 for the first time since Dec. 1 on the
Luxembourg-based Bitstamp Exchange. The biggest digital currency
has lost half its value since it peaked near $20,000 about a
month ago.
    Meanwhile, the dollar index, against a basket of six major
currencies       , was up 0.33 percent at 90.844 after hitting
90.113 on Wednesday, its lowest since Dec. 31, 2014.       
    Spot gold is expected to fall to $1,311 per ounce, as it has
broken a support at $1,329, according to Reuters technical
analyst Wang Tao.         
    In other precious metals, silver        edged 0.1 percent
lower to $16.99 per ounce and palladium        slipped 0.4
percent to $1,110.99 per ounce.
    Platinum        crept 0.1 percent lower to $996.20 per
ounce, after touching its highest since Sept. 8 at $1,006.60 in
the previous session. 

 (Reporting by Nallur Sethuraman and Nithin Prasad in Bengaluru,
Editing by Sherry Jacob-Phillips and Amrutha Gayathri)