March 8, 2018 / 3:37 PM / 8 months ago

PRECIOUS-Gold slips as ECB's Draghi lifts the dollar

    * Euro dips as ECB signals only gradual policy normalization
    * GRAPHIC-2018 asset returns: tmsnrt.rs/2jvdmXl

 (Recasts, updates prices; adds comment, NEW YORK dateline)
    By Renita D. Young and Jan Harvey
    NEW YORK/LONDON, March 8 (Reuters) - Gold prices fell on
Thursday as the U.S. dollar bounced from a near three-week low
against the euro after European Central Bank President Mario
Draghi signaled that any policy normalization in the euro zone
would be very gradual.
    The euro forfeited early gains against the dollar to decline
after Draghi said monetary policy would remain "reactive" and
measures of underlying inflation were still subdued.
                   
    Spot gold        was down 0.4 percent at $1,320.67 per ounce
by 1:34 p.m. EST (1834 GMT). It touched a one-week high of
$1,340.42 on Wednesday before closing 0.6 percent lower. U.S.
gold futures         for April delivery settled down $5.90, or
0.4 percent, at $1,321.70 per ounce. 
    "The stronger dollar is definitely a headwind for gold,"
said Walter Pehowich, executive vice president of investment
services at Dillon Gage Metals. "Once it broke above the 90
level (vs the dollar index       ), gold came under significant
pressure."
    European and U.S. stocks rose as traders took a break from
worrying about a potential global trade war and focused on the
ECB's plans to end its 2.5 trillion euro stimulus program.
           
    "Investors are watching to see if there are any hints that
the ECB is winding down their quantitative easing," said Chris
Gaffney, president of world markets at EverBank. "If they do
that, you would see that strengthen the euro a bit."
    Markets are also awaiting further news on plans for U.S.
tariffs on some imported goods.             
    Draghi leveled pointed criticism of U.S. President Donald
Trump's plans for more trade tariffs. "If you put tariffs
against (those) who are your allies, one wonders who the enemies
are," he said.
    Trump will sign a proclamation establishing the tariffs
during a ceremony scheduled for 8:30 p.m. EST, (2030 GMT), a
source familiar with the situation said.
    "Should tariff concerns remain in focus, gold should once
again find its feet," ANZ said in a note. 
    Traders are also awaiting Friday's non-farm payrolls data
for February, a key barometer of the U.S. economy, for further
clues on the pace of Federal Reserve rate increases. 
    Gold is highly sensitive to rising U.S. interest rates,
which increase the opportunity cost of holding non-yielding
bullion, while boosting the dollar in which it is priced.
    Silver        lost 0.1 percent at $16.48 an ounce, while
platinum        dropped 0.7 percent to $945.74 after touching
its weakest since Jan. 4 at $941.
    Palladium        was up 0.4 percent at $972.50 per ounce
after dropping to its lowest since Feb. 9 at $961.55 on
Wednesday.

 (Additional reporting by Nallur Sethuraman in Bengaluru
Editing by Elaine Hardcastle and Dan Grebler)
  
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