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* Gold scales 2-week high * Prices had gained over 2 pct on Friday * Holding $1,180 level key for further gains - trader (Updates prices) By A. Ananthalakshmi SINGAPORE, Nov 17 (Reuters) - Gold held near two-week highs on Monday, clinging on to gains from the previous session's short-covering rally, on a softer dollar. Spot gold held steady at $1,187.20 an ounce by 0724 GMT, after earlier climbing to a two-week high of $1,193.95. That followed a 2.3 percent jump on Friday that took the metal above a key technical level of $1,180. The dollar swung wildly against the yen on Monday, initially spiking to a seven-year high after data showed Japan's economy unexpectedly slipped into recession before pulling back as the grim economic news sent Tokyo stocks tumbling. The greenback also eased against a basket of major currencies. "A lot of new shorts were put into gold after we broke below $1,180 and as we came back through it, there was some short-covering," said a Hong Kong-based trader with a bullion bank. "The $1,180 level is still the one that everyone is looking at and if we hold that, we could go up to $1,230." However, the way higher may not be an easy one for bullion as the factors that brought down gold in the last few weeks to its lowest in four-and-a-half-years have not gone away. The dollar remains in favour with investors as U.S. data has been pointing towards a recovery, and the yen and euro have been weaker against the greenback. A stronger dollar and economic optimism could take the appeal off gold, often seen as an alternative investment to riskier assets. A robust economy could also prompt the U.S. Federal Reserve to soon raise interest rates, hurting non-interest-bearing gold. Bearish sentiment among investors prevailed. Speculators in gold futures and options slashed their long bets for a third straight week, according to the Commodity Futures Trading Commission.Hedge fund Paulson & Co maintained its stake in the world's biggest gold-backed exchange-traded fund, SPDR Gold Trust, in the third quarter, but legendary investor George Soros has sharply cut his stake in Barrick Gold Corp and several gold mining company ETFs.
