* Price slide triggers some physical buying
* Spot palladium hits more than 16-month high of $741.75/oz
* Spot gold may fall to $1,647/oz - technicals
* Coming up: U.S. durable goods orders; 1330 GMT
By Rujun Shen
SINGAPORE, Jan 28 Gold edged up on Monday but
struggled to break away from a two-week low hit in the previous
session, with a brighter global economic outlook dampening the
metal's appeal as a safe haven.
Platinum group metals fared better, with spot palladium
hitting its highest in more than 16 months. Platinum metals have
industrial applications and benefit from an improved economic
Signs that the euro zone crisis is stabilising and the U.S.
recovery is gaining traction drove investors to the
higher-yielding equity market, sending Wall Street up for the
eighth straight day on Friday.
"The weakness in gold may continue in the short run as weak
technicals and upbeat data from key economies put pressure on
prices," said Li Ning, an analyst at Shanghai CIFCO Futures.
"Investors would rather move their money into equities or
bulk commodities from safe-haven assets."
Spot gold inched up 0.1 percent to $1,660.74 an ounce
by 0704 GMT, after dropping 1.5 percent last week -- its
sharpest weekly loss n a month. It fell to a two-week low of
$1,655.39 in the previous session.
U.S. gold was up 0.2 percent to $1,660.40.
Technical analysis suggested that spot gold could break
below support at $1,656 and fall further to $1,647 during the
day, said Reuters market analyst Wang Tao.
Investors will closely watch the Federal Reserve's policy
meeting this week as well as a string of data on employment,
economic growth and consumption, to gauge the pace of recovery
in the world's largest economy.
In the latest gold holdings data from the International
Monetary Fund, Iraq cut its gold holdings by a quarter to 29.9
tonnes in November, reversing some of the country's recent
efforts to bolster its reserves.
Physical buying ticked up in Asia, but was lacklustre
compared to the past few years when buying typically surged
ahead of the Lunar New Year festival, including in China, which
is vying with India to be the world's top gold consumer.
"Normally the demand in the region is strong at this time of
the year, but we are not seeing (that) this year," said Dick
Poon, general manager of Heraeus Precious Metals Hong Kong.
Hedge funds and money managers raised their net long bets in
U.S. futures and options of gold and silver in the week ended
Jan. 22, data from the U.S. Commodity Futures Trading Commission
Net length in platinum rose to a record high
of 38,097 contracts, and net length in palladium
climbed for a second straight week to an all-time high of 18,972
contracts, CFTC data also showed.
Spot palladium rose to $741.75 an ounce, its highest
since September, 2011, before easing slightly to $739.80, up
nearly 7 percent from the end of 2012.
Spot platinum gained 0.4 percent to $1,687.81,
posting a rise of nearly 10 percent so far this year.
Precious metals prices 0704 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1660.74 2.25 +0.14 -0.82
Spot Silver 31.25 0.19 +0.61 3.20
Spot Platinum 1687.81 6.81 +0.41 9.96
Spot Palladium 739.80 2.30 +0.31 6.91
COMEX GOLD FEB3 1660.40 3.80 +0.23 -0.92 17376
COMEX SILVER MAR3 31.27 0.06 +0.19 3.42 4338
COMEX gold and silver contracts show the most active months
(Editing by Tom Hogue and Muralikumar Anantharaman)