* ECB expected to cut deposit rate, expand asset-buying
programme
* SPDR Gold Trust holdings slip from 18-month high
(Updates prices)
By Manolo Serapio Jr
MANILA, March 9 (Reuters) - Gold edged lower on Wednesday,
slipping with the euro as expectations that the European Central
Bank is almost certain to ease policy this week weighed on the
single currency.
Investors are also taking profits in the precious metal
after its recent rapid rise, which saw it hit a 13-month high
last week. But Mark To, head of research at Wing Fung Financial
Group, said it may be a brief setback.
"Some correction is in place after the surge in gold prices
in the past few weeks, but support could be strong at $1,230,"
said To.
"I'm optimistic over the medium term because I don't think
the Fed is going to raise interest rates very soon despite the
recent good economic data," he said, citing policy easing moves
by other central banks.
Spot gold XAU= was down 0.4 percent at $1,256 an ounce by
0632 GMT. Gold touched $1,279.60 last week, its strongest since
Feb. 3, 2015.
Bullion could move towards $1,300 "or even $1,400" by the
second quarter, said To, who only sees one U.S. rate hike in
2016, possibly later in the year.
U.S. gold for April delivery GCcv1 eased 0.5 percent to
$1,256.70 an ounce.
Investors expect the European Central Bank to cut its
deposit rate by at least 10 basis points and expand its
asset-buying programme at its meeting on Thursday.
But after being disappointed in December, when policymakers
delivered less monetary easing than they had suggested,
investors doubt the ECB will be more aggressive. That could
reverse losses in the euro and weigh on the dollar, boosting
gold.
Gold had been supported by fairly low expectations that the
Fed will raise interest rates at its March 15-16 policy meeting.
The Fed lifted rates for the first time in nearly a decade in
December amid signs of strength in the U.S. economy.
The strength is particularly evident in the U.S. labour
market after a robust, forecast-beating 242,000 increase in
nonfarm payrolls in February. Gold has stood its ground despite
Friday's jobs data as many traders rule out the possibility of a
near-term hike in U.S. interest rates.
Holdings of SPDR Gold Trust GLD , the world's largest
gold-backed exchange-traded fund, dropped to 25.4 million ounces
on Tuesday, but that was not far below 18-month highs reached
last week. GOL/ETF
Spot silver XAG= declined 0.3 percent to $15.27 an ounce,
platinum XPT= lost 0.7 percent to $971.99 and palladium XPD=
fell 1.2 percent to $549.50.