By Swati Verma
(Reuters) - Gold shook off earlier losses on Tuesday to move back above the key $1,200 an ounce support level, benefiting from a slight retreat in the dollar following a rally backed by rising U.S. interest rates.
Spot gold edged up 0.2 percent at $1,202.90 per ounce at 11:45 a.m EST (1645 GMT), having fallen to its lowest since Oct. 11 at $1,195.90 earlier in the day. U.S. gold futures were steady at $1,203.70 per ounce.
Bullion was also on track to snap a seven session-long losing streak, supported by limited buying on the dips by price-sensitive customers.
"The weaker dollar is supporting gold, and a lot of people are anxious to purchase the metal below $1,200," said Phil Streible, senior commodities strategist at RJO Futures in Chicago.
"There is widespread liquidation in some of the markets, including energy. Investors may be shifting money around through new asset allocation by selling those positions and buying gold futures."
The dollar index, which measures the U.S. unit's performance against a basket of major currencies, eased 0.4 percent, having hit its highest since June 2017 in the previous session, making gold less expensive for holders of other currencies.
The dollar has benefited over the last week from expectations for further U.S. interest rate hikes, as well as concerns over Italy's budget and ongoing Brexit talks.
"There has been a bit of physical demand around the $1,200 levels," said David Meger, director of metals trading at High Ridge Futures.
"The continued weight on the gold market of late has been due to the slowly rising interest rate environment."
Bullion had traded between $1,211 and $1,243 an ounce for much of the last month before slipping sharply over the last two sessions.
"Gold's fall has done a lot of technical damage so the bounce we see could be short-lived," said Fawad Razaqzada, an analyst with Forex.com.
Meanwhile, holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.90 percent to 762.00 tonnes on Monday. Holdings hit their lowest since early 2016 last month after declining over the summer.
Silver rose 0.6 percent to $14.04 per ounce, having touched a more than two-month low of $13.92 earlier in the session.
Palladium climbed 1.6 percent to $1,112.50 per ounce, while platinum eased 0.3 percent to $838.50 an ounce.
(Reporting by Swati Verma, Sumita Layek and Arpan Varghese in Bengaluru; Editing by Tom Brown)
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