By Eric Onstad
LONDON (Reuters) - Gold spun its wheels on Wednesday as a strong dollar kept a lid on gains but some analysts said bullion may get support from European political risks in coming months.
Spot gold was unchanged at $1,211.81 an ounce by 1120 GMT after dipping in the previous session by 0.15 percent. U.S. gold futures rose 0.1 percent to $1,212 per ounce.
Gold has shed nearly 10 percent from a peak hit in the aftermath of the U.S. election two weeks ago, holding above key support around $1,200.
The metal has been hit by expectations that the policies of U.S. president-elect Donald Trump will boost economic growth and strong U.S. data that has supported an interest rate rise.
But with traders pricing in a 100 percent chance of a December rate increase, according to the CME Group's FedWatch Tool, gold's downtrend may be bottoming out, one analyst said.
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"I suspect that maybe 70 percent of the rate rise is priced into the market, and when it comes through, you may have 'sell the rumour and buy the fact'," said Robin Bhar, head of metals research at Societe Generale in London.
The Federal Reserve next meets on Dec. 13-14.
Uncertainty surrounding Italy's constitutional referendum on Dec. 4 and French and German elections next year could support gold, he added.
"I suppose in terms of a safe-haven bid we've got some European political risks coming through and seasonally as we move towards Christmas/New Year and Chinese New Year, that should see some physical support."
Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced. The dollar was steady on Wednesday near a recent 13-1/2-year peak.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.42 percent to 904.91 tonnes on Tuesday. Holdings have dropped 4 percent so far this month.
While Trump's victory has spurred safe-haven buying of physical gold in Europe, traditional bullion holders in the United States are standing pat.
Another analyst reckoned gold was vulnerable to more losses in the short term.
"We suspect that the precious metal will be under further pressure, likely taking out $1,200 support in fairly short order," INTL FCStone analyst Edward Meir said in a note.
Silver fell 0.1 percent to $16.62 per ounce and platinum shed 0.3 percent to $940.
Palladium gained 0.6 percent at $744.20 after touching its highest since early June at $749.40 in the previous session.
(Editing by Dale Hudson)
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