Gold firm near $1,200, eyes third weekly gain

SINGAPORE, Nov 23 (Reuters):  Gold was heading for its third-straight weekly gain on Friday, buoyed by short-covering and a pause in the dollar rally, while physical demand is also picking up on firmer prices.
The metal traded between $1,175 an ounce and $1,205 this week, largely steady after a dip to four-and-a-half-year lows earlier in the month.
"While the current macro environment of low inflation and a strong dollar has provided a headwind for bullion, a convincing break above the $1,200 level may invite buying from momentum investors," said HSBC analyst James Steel.
Helping support bullion, Thursday data showed that underlying inflation pressures rose in October, even though that also bolstered expectations of a mid-2015 interest rate hike from the Federal Reserve.
Bullion is seen as a hedge against inflation, though an increase in rates could dull its investment appeal. Gold is a non-interest-bearing asset.
Spot gold was little changed at $1,192.64 an ounce by 0347 GMT, after gaining nearly 1 per cent in the previous session. The metal is so far up 0.4 per cent for the week.
The US dollar paused for breath on Friday as its recent rapid ascent on the yen attracted profit taking, though the market mood remains bullish on the currency given the outperformance of the U.S. economy.
Gold had fallen to a 4-1/2-year low of $1,131.85 earlier this month on a strong dollar.