January 22, 2015 / 3:46 AM / 3 years ago

PRECIOUS-Gold dips further below $1,300 ahead of ECB on strong equities

* Gold dips on profit-taking
    * Asian stocks near eight-week high
    * Coming up: ECB outcome of policy meeting at 1330 GMT

 (Updates prices)
    By A. Ananthalakshmi
    SINGAPORE, Jan 22 (Reuters) - Gold fell further below a
five-month high on Thursday, hurt by profit-taking ahead of the
European Central Bank's decision on stimulus measures, and
strength in Asian equities that dented the metal's safe-haven
appeal.
    Market expectations are sky-high for the ECB to unveil a
large-scale programme of quantitative easing - printing money to
purchase sovereign bonds - resorting to its last big policy tool
for breathing life into the flagging euro zone economy and
fending off deflation. 
    The stimulus measures should increase demand for bullion,
but gold could have already priced in the ECB factor. Prices
climbed to $1,305 an ounce on Wednesday, their highest since
August.
    "Increased liquidity in the euro-region is set to boost the
prices of gold, as the precious metal may enjoy fund inflows
from hot money coursing through Europe," said Howie Lee,
investment analyst at Phillip Futures.
    Spot gold fell 0.5 percent to $1,286.40 an ounce by
0724 GMT as profit-taking sent prices lower.
    A sizeable quantitative easing package could send gold to
$1,320, Lee said, adding that support for any price declines
would come in at $1,250. 
    The strength in stock markets helped keep prices in check on
Thursday.
    Asian shares rose to near eight-week highs on hopes the
ECB's stimulus measures would revive the flagging euro zone
economy. 
    The metal has rallied on safe-haven bids from political and
economic uncertainties in Europe, along with concerns over the
health of the global economy. 
    The recent steep climb in gold prices - about 9 percent this
month - has worried has some traders.
    This was reflected in SPDR Gold Trust, the world's top
gold-backed exchange-traded fund, which saw outflows of 0.24
percent to 740.45 tonnes on Wednesday. 
    In news from the physical markets, Indian gold importers
were offering discounts of up to $16 an ounce versus London
prices, the widest in 17 months, on weak demand and expectations
of a duty cut. 
    Persistent weakness in physical demand in top consuming
region Asia could undermine any rally in gold.

    PRICES AT 0724 GMT
 Metal           Last      Change   Pct chg
                                    
 Spot gold         1286.4    -6.66    -0.52
 Spot silver        18.01     -0.1    -0.55
 Spot platinum     1270.2      1.7     0.13
 Spot palladium    769.05     5.05     0.66
 Comex gold        1286.5     -7.2    -0.56
 Comex silver      18.035   -0.158    -0.87
 Euro              1.1591                  
 DXY               92.883                  
                                    
 COMEX gold and silver contracts show the
 most active months
 
 (Reporting by A. Ananthalakshmi; Editing by Richard Pullin and
Sunil Nair)

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