PRECIOUS-Gold steadies, China growth worry weighs

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SINGAPORE (Reuters) - Gold held around $1,700 an ounce Tuesday, after falling in the previous session as China, widely seen as the engine of the global economy, cut its economic growth targets, but cheaper prices could attract more buying from jewellers in Asia.

Shares in Asia and growth-linked currencies were under pressure after China cut its 2012 growth target to an eight-year low of 7.5 percent, while tension over Iran hurt risk appetite and prompted investors to take profits from recent rallies. <MKTS/GLOB>

Gold hardly moved at $1,704.19 an ounce by 0243 GMT, having tumbled nearly 4 percent last week. Bullion struck a record at around $1,920 an ounce last September.

"A lot of gold investors are still affected by the large sell-off last week. Many are looking at the technical charts, where gold may come down further before it goes up," said Lynette Tan, an analyst with Phillip Futures in Singapore.

"I think it's very strongly supported at the 200-day moving average. If (China) announces some sort of easing policy, it could support gold prices.

"Many are looking at the technical charts, where gold may come down further before it goes up," said Lynette Tan, an analyst with Phillip Futures in Singapore."I think it's very strongly supported at the 200-day moving average"So far, they don't really talk much about gold. I think in the longer-term, of course, we are looking at China to become the top buyer of gold."

Lower growth allows Beijing to reform key price controls without causing an inflation spike, ensuring a steady flow of credit to the small and medium-sized firms the government wants to encourage.

Gold demand struck 14-year highs in 2011, driven by record investment, buying in China, and central bank purchases, which hit their highest in at least 40 years, the World Gold Council said. China could also overtake India this year as the world's main consumer.

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U.S. gold for April delivery added 0.08 percent at $1,705.30 an ounce.

Bullion's nearly 4 percent loss last week -- its worst weekly performance since mid-December -- came after Federal Reserve Chairman Ben Bernanke gave no further hints of any imminent U.S. quantitative easing.

Year to date, bullion is still 9 percent higher.

"Customers are happy to buy at the current level, although things have slowed down a bit. I guess they could buy more if prices fall further," said a physical dealer in Singapore.

Dealers said while gold was likely to consolidate in the short term, in the longer run it remains firmly underpinned by ultra-loose U.S. monetary policy, portfolio diversification and strong physical demand from Asia.

In the currency market, commodity currencies stayed under the cosh in Asia on Tuesday, having suffered a shakeout overnight as investors cut bullish positions after China announced its lowest annual growth target in eight years. <USD/>

(Editing by Himani Sarkar)