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PRECIOUS-Gold rises more than 1 percent as euro rebounds on ECB comments
March 10, 2016 / 10:56 AM / 2 years ago

PRECIOUS-Gold rises more than 1 percent as euro rebounds on ECB comments

* Coming up: U.S. FOMC meeting March 15-16

* GRAPHIC-Gold vs currencies: link.reuters.com/cyv95s (Updates throughout; adds comment, byline, NEW YORK dateline)

By Marcy Nicholson and Jan Harvey

NEW YORK/LONDON, March 10 (Reuters) - Gold rebounded by more than 1 percent on Thursday as the euro bounced back from a six-week low against the dollar after European Central Bank (ECB) chief Mario Draghi indicated that further interest rate cuts in the euro zone are unlikely.

Both the single currency and bullion prices had fallen earlier in the day after the ECB reduced interest rates and expanded its bond-buying program in an attempt to boost growth and inflation in the currency bloc.

That sent spot gold to a low of $1,237.06 an ounce, but by 2:46 p.m. EST (1946 GMT) it had gained 1.4 percent to $1,270.10. U.S. gold futures for April delivery settled up 1.2 percent at $1,272.80.

The ECB dropped its main refinancing rate to zero on Thursday, from 0.05 percent, while expanding its quantitative easing asset-buying program to 80 billion euros ($88.7 billion) a month from 60 billion euros and cutting its deposit rate to -0.4 percent from -0.3 percent.

That initially sent the euro sharply lower, but the currency recovered to a three-week high against the dollar after Draghi said the bank did not expect that it would be necessary to cut rates further.

Global stock markets fell, another supportive factor for gold prices, traders said.

“This was seen as maybe a prelude to further stimulus, but the fact that there has now been a line drawn under that is giving some comfort to the euro, and therefore to gold,” Mitsubishi analyst Jonathan Butler said.

“The attention now turns to what the Fed is going to do next week. Looking at the Fed futures market now, the money seems to be on a September rate rise, which is quite a change from a couple of weeks ago.”

On Wednesday, holdings of the world’s largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, resumed their upward trend after a brief hiatus.

Technically, gold prices look strong as well.

“The open and close of yesterday is contained within the open and close of today, so that’s a bullish scenario. This suggests a little more strength here,” said Eli Tesfaye, senior market strategist for brokerage RJO Futures in Chicago, adding that the market is eyeing $1,300.

“The violence with which this market is rallying suggests the momentum is with the bulls right now.”

In other precious metals, silver rose 1.8 percent to $15.56 an ounce, platinum fell 0.3 percent to $975 and palladium was up 0.8 percent at $568.

Additional reporting by Manolo Serapio Jr; editing by Mark Potter, David Goodman and Diane Craft

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