January 11, 2018 / 12:20 PM / a year ago

PRECIOUS-Gold nears 4-month highs after hawkish ECB boosts euro

    * ECB hints at tighter monetary policy
    * Dollar falls on weak U.S. inflation, more jobless claims
    * Gold up more than $80 since mid-December

 (Recasts lead paragraph, updates prices; adds comment, NEW YORK
to dateline)
    By Renita D. Young and Peter Hobson
    NEW YORK/LONDON, Jan 11 (Reuters) - Gold prices on Thursday
approached a four-month high set on the previous day after
minutes of a European Central Bank meeting showed a more
aggressive tone and boosted the euro against the U.S. dollar.
    The December meeting minutes said the central bank should
revisit its policy message in early 2018 and gradually adjust
its language to reflect improved growth prospects.             
    "The euro gained against the dollar after the minutes from
the ECB's December meeting showed a hawkish tone," said John
Lawrence, a senior trader at Heraeus Precious Metals in New
    Investors would probably take a policy message change as a
sign that rate-setters may begin to wind down their
2.55-trillion-euro bond-buying program. 
    A stronger euro potentially boosts demand for gold by making
dollar-priced bullion cheaper for European investors. 
    The dollar        weakened more broadly after U.S. data
showed a rise in jobless claims and a decrease in producer
prices, making gold cheaper for other non-U.S. buyers.             
    Daniel Ghali, commodities strategist at TD Securities in
Toronto, said he had been expecting a lower dollar.
    "The U.S. is set to tighten their quantitative easing, but
other central banks around the world are going to play catch
up," he said. "That should sap some strength out of the dollar
during the year." 
    Spot gold        was up 0.5 percent at $1,322.74 an ounce by
1:37 p.m. EST (1837 GMT) after touching $1,326.56 on Wednesday,
the highest since Sept. 15.
    U.S. gold futures         for February delivery settled up
$3.20, or 0.2 percent, at $1,322.50 per ounce. 
    The weaker dollar has helped gold rally by more than $80
from its mid-December low, but it will struggle to rise much
further in the short term, said Saxo Bank analyst Ole Hansen. 
    Several other factors were supporting gold prices, including
a dip in global equities following a spectacular rally, and a
rise in industrial metals that will increase the cost of goods
and services.                    
    "People are starting to pick up on gold as a hedge," Ghali
said. "There might be a growing community of people that are
worried about an equity correction."
    Among other precious metals, spot silver        was up 0.1
percent at $16.96 an ounce from a two-week low of $16.86 on
    Platinum        was up 1.31 percent at $983.70 an ounce
after hitting $985.10, its highest since Sept. 15.
    Palladium        rose 0.2 percent to $1,084.60 an ounce
after touching a nine-day low of $1,075.50.

 (Additional reporting by Nallur Sethuraman in Bengaluru;
Editing by Mark Potter and Lisa Von Ahn)
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