* European Central Bank’s policy decision due 1245 GMT
* Spot gold may retest support at $1,278- technicals (Adds comments, updates prices)
By Sethuraman N R
Jan 24 (Reuters) - Gold held steady on Thursday, supported by a softer dollar due to concerns the prolonged U.S. government shutdown will limit economic growth even as concerns of slowing global growth grew.
Spot gold was mostly steady at $1,281.54 per ounce, as of 0717 GMT, while U.S. gold futures were down 0.2 percent at $1,281 per ounce.
“Rising economic and geopolitical uncertainties, a more dovish Federal Reserve and waning U.S. dollar strength continue to underpin gold prices,” said Soni Kumari, commodity strategist with ANZ.
“However, the recent rebound in equity markets limits further upside,” she added.
The U.S. dollar index, which measures the greenback against a basket of six major currencies, was hamstrung versus its rivals. However, Asian shares rose on Thursday after Wall Street managed to end higher.
“The issue for gold is (that) there is a very heavy resistance seen around $1,290 and $1,310. A further weakening of the U.S. dollar could be supportive. But we need something to really push gold through the resistance level,” said Michael McCarthy, chief market strategist at CMC Markets.
On Wednesday, U.S. President Donald Trump said that the United States was doing well in trade talks with China, saying at a White House event that China “very much wants to make a deal.”
A prolonged U.S. government shutdown, however, reminded investors of risks to growth to the economy.
White House economic adviser Kevin Hassett said in a CNN interview the U.S. economy could see zero growth in the first three months if the partial government shutdown lasts for the whole quarter.
Meanwhile, investor focus turned to the European Central Bank (ECB), which is widely expected to keep its monetary policy unchanged at its first policy meeting of 2019 that ends later on Thursday.
Market watchers also expect ECB to acknowledge growing threats to the euro zone economy.
“Should (ECB President Mario) Draghi take a more dovish tone we may see the euro under pressure, creating a firmer greenback and weighing upon metals prices,” MKS PAMP Group said in a note.
Technically, spot gold may retest a support at $1,278 per ounce, a break below which could cause a loss to the next support at $1,266, according to Reuters analyst Wang Tao.
Among other metals, palladium, which hit a record high of $1,434.50 an ounce last week on low inventories and rising demand, was steady at $1,346 an ounce.
Silver was down 0.3 percent $15.33 an ounce, while platinum rose 0.3 percent to $796. (Reporting by Nallur Sethuraman in Bengaluru; Editing by Sherry Jacob-Phillips, Christian Schmollinger and Rashmi Aich)