* Dollar drops to three-week low versus euro
* Biggest gold ETF sees biggest one-day inflow since Sept
* GRAPHIC-2017 asset returns: tmsnrt.rs/2jvdmXl
(Updates prices; adds comment, byline, NEW YORK dateline)
By Marcy Nicholson and Jan Harvey
NEW YORK/LONDON, April 20 Gold steadied on
Thursday after its biggest one-day drop in more than six weeks,
with a retreat in the dollar arresting the slide, though moves
were muted as markets await the outcome of the looming French
Polls ahead of the French vote, which begins this weekend,
give both far-right and far-left candidates a chance of making
it into next month's run-off, though centrist candidate Emmanuel
Macron is shown in the lead. The euro rose to a three-week high
against the U.S. dollar.
Spot gold was up 0.16 percent at $1,281.02 an ounce
by 2:32 p.m. EDT (1832 GMT). The metal hit a five-month high of
$1,295.42 on Monday before pulling back, and was on track to
fall this week after five straight weeks of gains.
U.S. gold futures for June delivery settled up 0.03
percent at $1,283.80.
"Even though momentum has been positive there are other
factors preventing a quick move higher from here - the sentiment
is still that there will be stronger data from the U.S., and
yields will probably rise. That will likely limit the upside
(for gold)," said ABN Amro analyst Georgette Boele.
Improving appetite for equities, which edged higher in
Europe and the United States, was also undermining demand for
gold as a haven from risk, she added.
Holdings of the world's largest gold-backed exchange-traded
fund, New York-listed SPDR Gold Shares , rose 11.8 tonnes
on Wednesday for their biggest one-day inflow since September,
data from the fund showed.
"While the metal is well positioned for a test of $1,300
with geopolitical concerns underpinning its safe-haven status,
the failed tests of $1,290 are beginning to weigh upon investor
confidence," MKS said in a note.
Among other precious metals, spot palladium was the
strongest gainer of the day, rising 3.2 percent to $799.58 an
ounce, on track for its biggest one-day jump since early
"Supply will struggle to register any growth, and indeed is
likely to show a small decline following unusually high
production in Russia in 2016. Demand, on the other hand, will
continue to expand," said Johnson Matthey Precious Metals
Management in a quarterly report.
"Higher vehicle production, combined with an increase in
average catalyst loadings at a global level, will drive
autocatalyst demand for the metal to another record level."
Silver was down 0.4 percent at $18.01, while platinum
was up 1.1 percent at $973.24.
(Additional reporting by Nallur Sethuraman in Bengaluru;
Editing by David Goodman and Chris Reese)