* Gold ticks up after 1 percent gain on Friday
* Drop in equities, dollar supports safe-haven bids
* U.S. rate hike outlook to continue to weigh on prices (Updates prices)
By A. Ananthalakshmi
SINGAPORE, Dec 21 (Reuters) - Gold edged up on Monday, adding to sharp gains from the previous trading session, as weakness in the dollar and equities helped the metal recoup some losses from a U.S. interest rate hike last week.
Concerns that demand for non-interest-paying bullion will take a hit from the rate hike continue to cast a shadow, and will likely limit any rally in gold.
Spot gold XAU= had ticked up 0.3 percent to $1,069.36 an ounce by 0640 GMT, adding to the 1.4 percent gain on Friday.
"We believe that trading conditions will start to thin out, but that does not mean trading ranges will necessarily narrow," said INTL FCStone analyst Edward Meir.
Liquidity will start to drop as trading enters the last two weeks of the year.
"Given the uninspiring chart patterns, we have to suspect that the path of least resistance remains lower still for the precious group as a whole, exacerbated by a stronger dollar and a more aggressive Fed," Meir said.
The metal saw some safe-haven bids on Friday after global equity markets fell sharply as slumping oil prices raised concerns about slower growth, while the dollar slipped against the yen on views the Bank of Japan may not ease policy as much as expected. MKTS/GLOB
But the outlook for the dollar is bullish as the Fed is set to hike rates further next year.
Gold's Friday rally followed a 2 percent loss in the session prior to that, the metal's biggest single-day loss in five months, as the Federal Reserve raised U.S. interest rates for the first time in nearly a decade.
In the run up to the Fed move, speculators built a record bearish bet in COMEX gold, U.S. Commodity Futures Trading Commission data showed on Friday, a factor that could trigger some short-covering. urn:newsml:reuters.com:*:nL1N1472GX
"We believe the pace of U.S. rate hikes will decide the fate of gold," ANZ said in a note.
The U.S. central bank had said last week its median policymaker forecast expected the equivalent of four quarter-point hikes next year. urn:newsml:reuters.com:*:nL1N1441IT
The metal could revisit $1,000 for the first time in six years if it breaks below its early December low at $1,045, according to technical analysts. urn:newsml:reuters.com:*:nL1N1462W3
Assets in SPDR Gold Trust GLD , the top gold-backed exchange-traded fund, rose 2.98 percent to 648.92 tonnes on Friday, the first increase in two months.
Total holdings had fallen to a seven-year low last week. GOL/ETF
PRICES AT 0640 GMT
Metal
Last
Change Pct chg
Spot gold
1069.36
3.55
0.33 Spot silver
14.124
0.054
0.38 Spot platinum
853.8
-4.75
-0.55 Spot palladium
556.75
1.53
0.28 Comex gold
1068.7
3.7
0.35 Comex silver
14.115
0.019
0.13
COMEX gold and silver contracts show the most active months