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CORRECTED-PRECIOUS-Gold falls to two-week low after BoE holds rates steady

Published 14/07/2016, 11:05 pm
© Reuters.  CORRECTED-PRECIOUS-Gold falls to two-week low after BoE holds rates steady
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(Corrects name para 8)

* BoE says likely to deliver stimulus in three weeks

* Global stocks hover near eight-month highs

* Palladium retreats from Wednesday's eight-month high

By Clara Denina

LONDON, July 14 (Reuters) - Gold fell 1.5 percent on Thursday as global equities stayed in positive territory after the Bank of England (BoE) surprised investors by leaving interest rates unchanged.

The BoE said it was likely to deliver stimulus to the economy in three weeks, once it assessed how Britain's vote to leave the European Union has affected the economy. gold XAU= fell as much as 1.5 percent to $1,321.79 an ounce, the lowest since July 1, and was down 1.3 percent at $1,325.36 by 1158 GMT.

"Britain has got a new prime minister, which, alongside expectations of more stimulus from the Bank of England, has brought a sense of relief to markets, so gold is easing and everything else is rising on that," Citi strategist David Wilson said.

"But the whole process of Brexit negotiations, which hasn't started yet, implies financial risks that will be supportive for the metal in the medium term."

Gold touched a two-year high of $1,374.91 last week, after Britain voted to leave the European Union, as worried investors started putting their cash into safe-haven assets.

After five weeks of gains, the metal has come under some pressure following strong U.S. non-farm payrolls data on Friday, which some took as a boost to the prospects for an interest rate increase by the U.S. Federal Reserve.

Philadelphia Fed President Patrick Harker said on Wednesday the U.S. central bank would likely opt for a "fairly shallow" series of U.S. interest rate rise and that he wanted to "let it play out a bit" before backing tighter policy. gold is likely to retest support at $1,328 per ounce, a break below which could cause a loss to the next support at $1,313, according to Reuters technical analyst Wang Tao. palladium XPD= slipped 0.6 percent to $637 an ounce, after hitting an eight-month high of $647.20 in the previous session.

Silver XAG= fell 1.2 percent to $20.07 an ounce, while platinum dropped 1 percent to $1,078 an ounce.

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