* Gold reverses previous session's decline
* Brent oil holds above 11-year lows (Updates prices)
By Clara Denina
LONDON, Dec 29 (Reuters) - Gold edged up on Tuesday in response to firmer oil prices, but a rebound in the dollar limited upside momentum for the metal, which appeared poised for a third year of losses amid the prospect of rising U.S. interest rates.
Gold is likely to end 2015 down nearly 10 percent, mostly due to expectations that higher U.S. rates will hit demand for the non-interest-paying metal.
Spot gold XAU= was up 0.02 percent to $1,069.6 an ounce at 2:17 p.m. EDT (1917 GMT), after losing 0.6 percent in the previous session. Volumes were thin during the last trading week of the year.
U.S. gold futures GCcv1 for February delivery settled at $1,068.0 an ounce, little changed from the previous day's close of $1,068.3.
"Conditions (should) remain fairly quiet into the year end, with gold tracking a $1,060-1,085 range, in lieu of limited data and a number of traders still on holidays," MKS PAMP senior dealer Alex Thorndike said.
The dollar, weaker initially, rebounded 0.3 percent against a basket of leading currencies, after U.S. data showed higher-than-expected consumer confidence in December. urn:newsml:reuters.com:*:nZON05MO00
Separately, data also showed U.S. single-family home prices rose in October at a slightly faster pace than in September and above market expectations.
The U.S. currency will continue to be the main driver for gold, analysts said.
Aided by an improving U.S. economy, the Federal Reserve raised rates for the first time in nearly a decade this month and hinted at further gradual increases in 2016.
Global benchmark Brent crude LCOc1 steadied above 11-year lows but gains could be limited by persisting near-record output. O/R
Assets of SPDR Gold Trust GLD , the top gold-backed exchange-traded fund, fell 0.18 percent to 643.56 tonnes on Monday, close to a seven-year low.
Speculators' short positions in COMEX gold contracts are near an all-time high, though data on Monday showed they had reduced the record bearish stance in the week to Dec. 22. urn:newsml:reuters.com:*:nL1N14H159
The technical picture also looked weak.
A breach of $1,067 an ounce could send the metal all the way to a multi-year low of $1,048, ScotiaMocatta said in a note.
Silver XAG= rose 0.7 percent to $14.03 an ounce, but was heading for an 11 percent yearly fall, while palladium XPD= gained 0.85 percent to $556.75 an ounce and platinum XPT= rose 1.14 percent to $889.55 an ounce.