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PRECIOUS-Gold at 3-week high as ECB comments lift euro, dollar falls
July 20, 2017 / 1:56 PM / in 4 months

PRECIOUS-Gold at 3-week high as ECB comments lift euro, dollar falls

    * Euro recovers ground lost after loose policy reaffirmed
    * SPDR Gold Trust holdings fall to lowest since early Feb
    * GRAPHIC-2017 asset returns: tmsnrt.rs/2jvdmXl

 (Recasts; updates prices; adds comment, byline, NEW YORK
dateline)
    By Marcy Nicholson and Jan Harvey
    NEW YORK/LONDON, July 20 (Reuters) - Gold prices rose to a
three-week high on Thursday after European Central Bank
President Mario Draghi said ECB policymakers would discuss
potential changes to the bank's bond-buying scheme in the
autumn, lifting the euro to a 14-month high.
    Draghi said the policymakers were unanimous in choosing not
to change their guidance for monetary policy, and not to set a
date for discussing changes to its stimulus program. However, he
flagged further discussions later in the year.             
    That was enough to spark a recovery in the euro after early
losses while the U.S. dollar index        fell to the lowest in
11 months, lifting gold prices.        
    "Draghi's speech was essentially dovish, emphasizing a 'very
substantial degree of accommodation' and reaffirming the
commitment to quantitative easing," Mitsubishi analyst Jonathan
Butler said. 
    "The ECB will defer the decision on QE tapering until the
autumn – the euro gained ground on this news and the resulting
fall in the dollar helped gold recover from some of its earlier
losses," he added.
    Spot gold        was up 0.4 percent at $1,244.92 an ounce by
2:17 p.m. EDT (1817 GMT), after rising to $1,247.48, the highest
since June 30.
    Technically, the market has strengthened after holding above
the 200-day moving average for the fourth straight session,
though the 50-day and 100-day moving averages were seen posing
resistance right around the day's high.
    U.S. gold futures         for August delivery settled up 0.3
percent at $1,245.50.
    The maintenance of loose monetary policy in the euro zone
could be seen as either positive or negative for gold, depending
on whether demand responds positively to a persistently low
opportunity cost of holding the non-yielding metal or more
negatively to a weaker euro.
    "The news that (Robert) Mueller's investigation of Donald
Trump was being extended, that seemed to give the market a
boost," said Bill O'Neill, co-founder of LOGIC Advisors, about
the special counsel and U.S. president.             
    "I have never seen in my lifetime a president have so much
turmoil surrounding him. It's getting into people's minds and
the fear that maybe something might happen."
    Holdings of the world's largest gold-backed exchange-traded
fund, SPDR Gold Shares      , fell to the lowest level since
early February.     
    Among other precious metals, silver        was up 0.7
percent at $16.35 an ounce after touching $16.42, the highest
since July 3.
    Platinum        was 0.7 percent higher at $924.75 an ounce,
while palladium        was down 1.2 percent at $845.75 an ounce,
in sharp contrast to Wednesday's three-week high of $872.25.
    

 (Additional reporing by Nithin Prasad and Arpan Varghese in
Bengaluru; editing by Greg Mahlich and Diane Craft)
  

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