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PRECIOUS-Gold dips as ECB knocks euro, equities recover lost ground

Published 22/01/2016, 07:38 am
© Reuters.  PRECIOUS-Gold dips as ECB knocks euro, equities recover lost ground
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* ECB hints at prospect of further stimulus for euro zone

* Gold struggles to maintain push above $1,100/oz

* GRAPHIC-Commodities in 2016: http://link.reuters.com/reb25t (Adds comment, byline, NEW YORK dateline; updates prices)

By Marcy Nicholson and Jan Harvey

NEW YORK/LONDON, Jan 21 (Reuters) - Gold fell on Thursday after posting its biggest one-day gain in two weeks the day before, as hints of further stimulus from the European Central Bank hurt the euro and a rebound in global stocks curbed risk aversion.

Turmoil in financial markets and concerns over China and other emerging markets will prompt a March review of the ECB's monetary policy, President Mario Draghi said after a meeting, holding out the prospect of further loosening. gold XAU= was down 0.1 percent at $1,099.70 an ounce at 3:13 p.m. EST (2013 GMT), after falling 0.8 percent to $1,092.15. It pared losses as the U.S. dollar turned lower.

U.S. gold futures GCv1 for February delivery settled down 0.7 percent at $1,099.20 an ounce.

"After Wednesday's $25 per ounce uptick in gold prices fueled by the global equity market selloff, today gold was dragged lower by profit taking, recovering equity markets, and a stronger U.S. dollar," said Giovanni Staunovo, commodities analyst at UBS Wealth Management in Zurich.

Oil prices and global equity markets rebounded, following a turbulent few days that wiped trillions of dollars off asset values, though it was unclear whether the vigorous selling action had come to an end. MKTS/GLOB

"Draghi's dovish remarks seem to have improved risk sentiment somewhat - the yen is lower and gold also a touch lower," ABN Amro analyst Georgette Boele said.

"The market was cautious ahead of the meeting and he sounds dovish. That is negative for the euro."

The dollar rose to its strongest against the euro in two weeks on Draghi's comments. USD/

"You're not seeing so much safe haven bidding, although that is probably supporting the market," Societe Generale (PA:SOGN) analyst Robin Bhar said.

"As the price inches higher, you're just losing steam from the physical markets. The physical buying is maybe not there to mop up any excesses, and for the moment gold appears to be struggling."

Physical gold demand in Asia slowed this week as prices rose, curbing seasonal buying in China ahead of a big holiday and forcing sellers in India to offer a discount. GOL/AS

Among other precious metals, platinum XPT= was up 0.05 percent at $818.40 an ounce, after falling to a 7-year low at $806.31.

Palladium XPD= was up 0.9 percent at $497.30 an ounce and silver XAG= was down 0.4 percent at $14.11.

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