* China, India buying support gold's strength * Spot gold may fall to $1,600 - technicals * Coming up: Spain bond auction (Adds detail; Updates prices) By Rujun Shen SINGAPORE, Jan 12 (Reuters) - Gold prices edged higher on Thursday on concerns about the euro zone debt crisis ahead of Spain's bond auction and a European Central Bank meeting, as robust buying from China and India also supported sentiment. Bullion built on gains from the previous two sessions, even as the euro wallowed near a 16-month low hit on Wednesday, after Fitch warned the European Central Bank to ramp up asset purchases to avoid the euro's demise. Later in the day, Spain will hold its first bond auction of the year, just hours before the ECB's first monetary policy announcement and interest rate decision for 2012, which could shed light on the next turn in the debt crisis. "The dollar and gold are both good buys at the moment as the markets watch the situation in Europe," said an official at a large bullion house in Tokyo, adding that the close correlation between the euro and gold at the end of 2011 has already broken. Cash gold has risen 5 percent so far this year, buoyed by the return of safe haven bids as the euro zone debt crisis entered its third year with no swift solution in sight and ongoing tensions between Iran and the West. Spot gold inched up 0.2 percent to $1,644.69 an ounce by 0704 GMT, holding steady above the key 200-day moving average at about $1,636. U.S. gold gained 0.4 percent to $1,646.50. But technical analysis suggested that spot could fall to $1,600 an ounce during the day, said Reuters market analyst Wang Tao. Buying from China ahead of Lunar New Year as well as strong demand from India have helped boost gold prices, dealers said. Shanghai spot gold grade 9999 traded at 336.96 yuan a gram, or $1,658.14 an ounce, about $13 above spot prices. "In the short term, prices should remain firm," said Peter Tse, director at ScotiaMocatta in Hong Kong. "But I wouldn't read too much into the short-term phenomenon as we need to see if the buying would sustain after the Lunar New Year." Tse said funds have been re-allocating their investment into gold along with other commodities, which also helped gold's rally in the beginning of the year. Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, edged down 0.4 tonnes to 1,254.159 tonnes by Jan. 11, after staying unchanged for more than two weeks. Platinum group metals continued to ride higher on supply concerns caused by power shortage in South Africa, a key producer of these metals. Spot platinum rose 0.9 percent to a one-month high at $1,502.5, before easing to $1,497.49. The gold-platinum spread narrowed to $147.80 an ounce, its lowest since late November. Precious metals prices 0704 GMT Metal Last Change Pct chg YTD pct chg Volume Spot Gold 1644.69 3.90 +0.24 5.17 Spot Silver 30.04 0.12 +0.40 8.49 Spot Platinum 1497.49 7.75 +0.52 7.50 Spot Palladium 643.47 3.48 +0.54 -1.38 COMEX GOLD FEB2 1646.50 6.90 +0.42 5.09 10446 COMEX SILVER MAR2 30.04 0.15 +0.50 7.61 1487 Euro/Dollar 1.2721 Dollar/Yen 76.89 COMEX gold and silver contracts show the most active months

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