Gold prices hovered near their two-week high above $1,400 on Wednesday as lacklustre economic data from the United States burnished the metal's safe-haven appeal, while a bullish forecast for next year helped keep the market sentiment buoyant.

Latest US data, showing consumer confidence unexpectedly deteriorated in December and prices of single-family homes fell almost double the expected pace in October, was at odds with other signs suggesting recovery was accelerating in the world's largest economy.

"The US economy outlook and monetary policy is a key factor that influences gold prices. We've seen data alternate between good and bad, showing that the economy is recovering, but without a strong momentum yet," said Hou Xinqiang, an analyst at Jinrui Futures, based in China.

Hou expected gold prices to be range bound with a strong support level at $1,360 in the short term, before they rally in the coming year.

Spot gold was flat at $1,405.51, after hitting a two-week high of $1,406.75 in the previous session. US gold futures edged up nearly $1 to $1,406.6.

Trading on the physical market was thin, as most market players were away on holidays, dealers said.

"Yesterday we saw some selling around $1,385, and today the market is quieter than the past two days," said a Singapore-based dealer.

"Jewellers are not buying at such price levels. its investors and hedge funds that would buy, betting on a further price rally," said a Singapore-based dealer, adding that among other factors, the uncertainty around the Euro Zone's sovereign debt crisis, would continue to support gold.

US Treasury yields inched up in Asia on short covering after a jump on Tuesday, on a growing safe-haven appetite that tends to benefit the bullion as well.

The dollar index .DXY was steady, after bouncing from a 1- week low on Tuesday.

STRONG SILVER

Spot silver hit a three-week high of $30.39 an ounce, and was trading at $30.28, as enthusiasm about gold as a safe-haven asset spilled over to silver, known as the "poor man's gold."

US silver futures also hit a three-week high of $30.42 an ounce.

The gold-silver ratio, used to measure how many ounces of silver is needed to buy one ounce of gold, dropped to a four-year low of 46.6, compared with a 10-year average of 62.2.

Spot palladium reached $787.25 an ounce, its highest since March 2001, and eased to $783.53.

Spot platinum was trading at $1,749.74, down about 0.2 per cent.

Analysts have had high hopes on the platinum group metals, citing robust growth in China's auto-industry, which is expected to boost consumption of the PGM, especially palladium, used to produce auto-catalyst.

China has said it will end tax incentives for small cars on 1 January, a long-anticipated move that would apply the brakes to the runaway expansion of the world's largest auto-market, but shares of auto-makers were unfazed by the announcement, suggesting continuous robust growth prospects for the industry.