* Physical buying not enough to send prices to recover
* Spot gold consolidates in $1,660-$1,688/oz range
* Coming Up: U.S. existing home sales, Nov; 1500 GMT
(Adds details; updates prices)
By Rujun Shen
SINGAPORE, Dec 20 (Reuters) - Gold edged up on Thursday, but
uncertainty around U.S. budget talks kept investors nervous and
Asia's physical buying interest failed to lift prices
substantially from a more than three-month low struck earlier
Talks in Washington to avert a fiscal crisis stalled as a
deadline approaches for the world's top economy to avoid $600
billion worth of tax hikes and spending cuts, dubbed the "fiscal
cliff", that could tip it back into recession.
Earlier this week, gold slipped to its lowest since the end
of August, and has languished near that level since, with
investors hesitant to jump in as the U.S. talks grind on.
The earlier sharp drop triggered some interest from Asia's
bullion buyers, lending support to the market, but the buying
was not enough to lift prices, dealers said.
"There is decent Asian physical buying but it's not enough
to send prices recovering," said a Tokyo-based trader.
Spot gold inched up 0.2 percent to $1,669.31 an ounce
by 0708 GMT, hovering above a key support at the 200-day moving
average of $1,660.83.
U.S. gold rose 0.2 percent to $1,670.60.
Spot gold may consolidate in the range of $1,660 and $1,688
an ounce for one more trading session before dropping towards
$1,631, said Reuters market analyst Wang Tao.
The weaker-than-expected physical demand in Asia will remain
a hurdle to gold's ascent, analysts said.
"Without a significant pick-up in physical demand, gold will
struggle to make big gains early next year, in our view,"
Barclays analysts said in a research note.
Supporting the sentiment in gold, the Bank of Japan
delivered its third dose of monetary stimulus in four months on
Thursday in a prelude to more aggressive action next year.
Spot gold has risen nearly 7 percent so far this year in its
twelfth year of gains, largely thanks to monetary stimulus
measures adopted by central banks, which drive investors worried
about currency debasement to hard assets including gold.
Holdings of SPDR Gold Trust, the world's biggest
gold-backed exchange-traded fund, were unchanged at 1,350.519
tonnes, not far off the historical high of 1,353.346 tonnes
struck in early December.
In industry news, South Africa wants to set export curbs on
minerals such as platinum and iron ore, as part of a drive by
the ruling African National Congress to create more jobs in the
continent's biggest economy.
Spot platinum dropped to a two-week low of $1,574.49
an ounce earlier in the day, and recovered to $1,588.74.
Spot silver fell to $30.94, its lowest since Nov. 5.
Precious metals prices 0708 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1669.31 2.75 +0.17 6.75
Spot Silver 31.12 0.13 +0.42 12.39
Spot Platinum 1588.74 1.75 +0.11 14.05
Spot Palladium 690.72 -0.32 -0.05 5.86
COMEX GOLD FEB3 1670.60 2.90 +0.17 6.62 15060
COMEX SILVER MAR3 31.19 0.07 +0.22 11.71 6707
COMEX gold and silver contracts show the most active months
(Editing by Ed Davies)