July 29, 2016 / 4:50 AM / a year ago

PRECIOUS-Gold steady on BOJ stimulus, set for monthly gain

* BOJ stimulus falls short of expectations
    * Palladium, platinum on track to notch best monthly gains
in years

 (Adds comments, updates prices)
    By Sethuraman N R and Vijaykumar Vedala
    BENGALURU, July 29 (Reuters) - Gold remained steady on
Friday and was on track for a monthly gain of 1 percent, as the
dollar extended its losses after the Bank of Japan's stimulus
fell short of market expectations. 
    The Bank of Japan expanded monetary stimulus on Friday
through a modest increase in purchases of exchange-traded funds,
yielding to pressure from the government and financial markets
for bolder action to spur growth and accelerate inflation
towards its 2 percent target.
    By coordinating its action with the government's big fiscal
spending package, the BOJ likely aimed to maximise the effect of
its measures on the world's third-biggest economy, which is
struggling to escape decades of deflation. 
    The dollar last traded at 103.28 yen, down 1.8
percent. The dollar index, which measures the greenback
against a basket of currencies, was down 0.4 percent at 96.363.
 
    Spot gold eased by 0.1 percent at $1,333.33 an ounce
at 0740 GMT, on track for its second straight session of monthly
gains, and was headed for its first weekly gain in three.
    U.S. gold too remained unchanged at $1,331.90 an
ounce.
    "Maybe at this moment, the BOJ's decision is a bit
supportive for gold," said Dominic Schnider of UBS Wealth
Management in Hong Kong.
    "If you ask me which is still the better safe-haven story...
It is gold and not yen. At one stage, the BOJ need to do more in
order to keep the economy going. That will make yen negative."
    Spot gold looks neutral in a range of $1,333.99-$1,346 per
ounce, and an escape will point a direction, according to
Reuters technical analyst Wang Tao. 
    Meanwhile, palladium, rose 0.4 percent at $695.72 an
ounce, after touching its highest since October 2015 in the
previous session. It is up nearly 17 pct this month, and on
track to notch its best monthly performance since February 2008.
    Platinum rose 0.5 percent at $1,133.75 an ounce and
was on track for its best month since January 2012, with a more
than 11 percent growth this month. It hit a 14-month high on
Wednesday. 
    "We are bullish on the PGMs (platinum group metals)
fundamentally, but we are unclear as to whether or not
fundamental motivations have been driving the current PGM
rally," HSBC analyst James Steel said in a note.
    Silver was down 0.2 percent at $20.11 an ounce, and
headed for a second monthly gain, after a 7.6 percent rise in
July.  

 (Reporting by Nallur Sethuraman and Vijaykumar Vedala in
Bengaluru; Editing by Biju Dwarakanath and Sherry
Jacob-Phillips)

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