By Chikako Mogi TOKYO (Reuters) - Gold prices rose towards $1,140 an ounce on Friday as the dollar steadied after snapping a four-day losing streak the day before, when investors returned to buy bullion following its fall from record highs hit last week. Spot gold marked a one-month low below $1,120 per ounce earlier this week and looks set for a weekly loss of 2.4 percent if prices stay at current levels, which put it 8 percent below the record high reached last week. Heightened jitters about sovereign credit problems helped accelerate and intensify seasonal selling pressures when investors typically close positions before Christmas and the year-end. Moves by some central banks to start absorbing extra liquidity pumped into the banking system in the wake of the global financial crisis last year were also weighing on sentiment. "Investors are taking profits and closing positions before Christmas and the year-end as gold prices remain at elevated levels and this activity is likely to continue for now," said Kazuhiko Saito, chief analyst at Fujitomi Co in Tokyo. "More importantly, there is a change in the structure that has driven gold's rapid rally to record highs. There are moves to take out excess liquidity, and considering that a lot of that money had been flowing into gold, it would not be surprising to see bullion coming under selling pressures," he said. Spot gold edged up 0.6 percent to $1,136.40 an ounce as of 0645 GMT. U.S. gold futures for February delivery rose 1.0 percent to $1,137.60 an ounce, compared with $1,126.20 on the COMEX division of NYMEX. Gold rose on Thursday, snapping a four-session losing streak as institutional investors and exchange-traded funds added positions after bullion retreated from record highs last week. A slew of closely watched Chinese data showed on Friday the economy remains on a solid footing, raising the prospect for Beijing to tighten its accommodative policy, analysts said. Chinese industrial output growth in November jumped to its strongest since June 2007, underlining the economy's brisk recovery from the global downturn in response to massive fiscal and monetary stimulus. Consumer price inflation also turned positive in November in year-on-year terms after nine straight months in negative territory. Wong Eng Soon, an investment analyst at Phillip Futures Pte ltd, said: "The market is performing much better today ... and I think one of the principle drivers is the release of the Chinese national production figures this morning." "They came out much better than the previous month, and they were also ... higher than forecasts, and this may have provided some upside in terms of the Chinese recovery story," he said. Earlier in the week, New Zealand's central bank signalled it may start raising rates in April, while South Korea's central bank offered a clear signal it was ready to raise interest rates as early as February. The Europen Central Bank kept rates on hold last week, but announced plans to start phasing out the extra liquidity operations in which billions of euros in extra funds have been pumped into the financial system since October last year. As the gold market steadied, holdings at the world's largest gold-backed exchange-traded fund, SPDR Gold Trust, stayed unchanged from the previous business day at 1,116.247 tonnes as of December 10. The fund posted its largest one-day percentage drop in about five months on December 8 when holdings fell 1.2 percent or 13.719 tonnes from the previous business day. The dollar was steady against a basket of major currencies.

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