* Market on track to end year down nearly 30 pct
* Some say gold could break below $1,050/oz next few weeks
* A few see slight support for bullion after SPDR inflow
By Barani Krishnan
NW YORK, Dec 23 (Reuters) - Gold edged lower on Monday as players limited their exposure prior to year-end holidays in a market heading for its biggest annual loss in three decades and facing further downside forecasts for 2014.
Bullion is on track to end the year down nearly 30 percent at a six-month low below $1,200 an ounce, and some forecasters said the market could break under the April 2010 bottom of below $1,050 in the new year.
Since the Federal Reserve announced the first tapering of the U.S. monetary stimulus last week after finding the economy strong enough for such action, many gold bulls have fled the precious metal which has been supported for several years by the economic support program.
While the Fed only cut $10 billion from its monthly asset purchases of $85 billion, analysts said the impact was predominantly psychological.
“Deflation has been the only thing running on people’s minds after the Fed action, not inflation, and that isn’t helping gold,” said Ralph Preston, futures analyst at HeritageWestFutures.com in San Diego, California.
“If the economy stays on track, I think gold will snap the July 2010 low of $1,170 in the next few weeks and take on the April 2010 lows of $1,050 in short order,” Preston said.
By 1:55 p.m. EST, the spot price of gold was down 0.4 percent to $1,198.57 an ounce. U.S. gold futures for February delivery were down 0.5 percent at $1,198.10.
For the year, bullion is down 28 percent, putting an end to a 12-year gold rally amid expectations the U.S. recovery would bring an end to the quantitative easing that made the precious metal an important economic hedge.
Some remained hopeful that all was not lost for gold.
“I would argue that there is support at $1,190 ... but there may be more downside as it doesn’t take much to move the market in thin holiday trading,” said Andrey Kryuchenkov, analyst at Moscow-based commodities broker VTB Capital.
Hedge fund managers cut their bullish bets on gold only modestly in the week to Dec. 17, data released on Friday showed.
Physical bullion held by SPDR Gold Trust rose 5.40 tonnes to 814.12 tonnes on Friday, the first inflow since Nov. 5 in the world’s largest gold-backed exchange-traded fund.
Still, SPDR, which accounts for around 40 percent of total ETF holdings, had seen a record outflow of more than 450 tonnes in 2013, bringing gold under its holdings to the lowest level in nearly five years.
Outflows from eight top gold ETFs, including SPDR, have totalled about 720 tonnes this year as investors channelled more money to riskier assets such as equities.
In other precious metals, silver was flat at $19.38 an ounce. Spot platinum edged down 0.3 percent to $1,323.50 an ounce, while spot palladium fell 0.6 percent to $691.75 an ounce.