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PRECIOUS-Gold falls from 13-month top on firm dollar, equities

Published 12/03/2016, 06:49 am
PRECIOUS-Gold falls from 13-month top on firm dollar, equities
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* Dollar rebounds vs euro after hitting 3-week low

* SPDR Gold Trust holdings highest since Aug 2014

* Physical gold demand slows in top consumer China

* Coming up: FOMC meeting March 15-16 (Recasts first paragraph, updates prices; adds comment, second byline, NEW YORK dateline)

By Marcy Nicholson and Clara Denina

NEW YORK/LONDON, March 11 (Reuters) - Gold fell 1 percent on Friday, as the dollar rebounded and oil and world stock markets rose, after bullion extended the prior session's gains to a 13-month high touched in early trade after the European Central Bank's announcement of additional easing.

ECB President Mario Draghi rolled out measures on Thursday including increased asset buying and a deeper cut to deposit rates, but signaled there would be no further rate cuts. gold XAU= rose as far as $1,282.51 an ounce, its strongest since Feb. 3, 2015, before falling 1 percent to $1,259.01 by 2:27 p.m. EST (1927 GMT), as the dollar rebounded from a three-week low versus the euro. MKTS/GLOB

It was on track to close the week flat after last week's 3 percent surge.

U.S. gold for April delivery GCJ6 settled down 1.1 percent at $1,259.40 an ounce, after peaking at $1,287.80.

"If you were long for significantly negative rates in Europe and Japan, you've seen what you're going to see, especially from Europe," said Rob Haworth, senior investment strategist for U.S. Bank Wealth Management in Seattle.

"If you were long gold because the Fed wasn't going to raise rates, those odds are increasing so it would be a good time to take profit."

The next main market focus is the U.S. Federal Reserve's policy meeting on March 15-16. The Fed lifted rates for the first time in nearly a decade in December.

If the Fed leaves rates unchanged next week, gold could suffer from the resurgence of some short-term risk appetite, ETF Securities analyst Martin Arnold said.

"In the longer term, gold will probably stay above $1,200, around the $1,250 area, while $1,300 represents a strong resistance level," Arnold added.

Supporting bullion, holdings of SPDR Gold Trust GLD , the world's largest gold-backed exchange-traded fund, rose to 25.68 million ounces on Thursday, the highest since August 2014. HLDSPDRGT=XAU

The relatively weak dollar and a repricing of expectations for U.S. interest rate rises have helped gold rebound by more than 18 percent this year so far. Bullion regained its role as a shelter for risk-averse investors, in the face of tumbling equities and fears of a global economic slowdown.

Physical gold demand slowed in top consumer China this week, while a strike by jewelers protesting against the imposition of a tax curbed demand in No. 2 market India. GOL/AS

Spot silver XAG= rose 0.1 percent to $15.61 an ounce, platinum XPT= was down 1.1 percent at $965.50 and palladium XPD= gained 1.4 percent to $578.50.

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