PRECIOUS-Gold inches up on weaker dollar, ECB stimulus in focus

Published 2016-09-08, 03:26 a/m
© Reuters.  PRECIOUS-Gold inches up on weaker dollar, ECB stimulus in focus
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* Spot gold faces resistance at $1,352 per ounce -technicals

* Silver off over 3-week highs marked Wednesday

* Platinum, palladium off 2-week highs hit prior session

* SPDR Gold holdings down slightly on Wednesday

* European Central Bank policy meeting outcome due 1145 GMT (Recasts on price rise, adds comment)

By Sethuraman N R

Sept 8 (Reuters) - Gold edged higher on Thursday on a weaker dollar, with investors looking to the outcome of a European Central Bank policy meeting later in the day for signs of economic stimulus.

The euro zone economy is widely expected to need more stimulus from the ECB, but it may not come at Thursday's meeting. are just not enough (assets) for the ECB to buy. If we see more buying, it will give a fillip to gold," said Jeffrey Halley, business development and market strategist with OANDA Asia Pacific.

"As long as the dollar remains weak, we can see gold test $1,350 and make its way up to $1,375-80 levels," he said.

Spot gold XAU= was up 0.2 percent at $1,347.01 an ounce by 0657 GMT.

U.S. gold futures GCcv1 rose 0.2 percent to $1,351.70

"While weaker-than-expected U.S. economic data over the past week point to diminished market-expected probability of a rate hike in September, we believe that the outlook for gold price movements is likely to be mildly bearish over the rest of 2016," said NAB analyst Vyanne Lai.

Several U.S. Federal Reserve officials have made hawkish comments in the past couple of days, making a push for rate increases. U.S. interest rates increase the opportunity cost of holding non-yielding bullion and boost the dollar, in which gold is priced.

"In the absence of bullish factors, gold tends to recede rather than hold steady. This may be the case now, and we may see further profit-taking near term," HSBC analyst James Steel said.

"The next rate rise should put a near-term floor on gold prices. Also bond yields remain low, another supportive factor. That said, gold looks to be on the defensive, at least near term."

Spot gold faces resistance at $1,352 per ounce, it may either hover below this level or retrace to support at $1,327, according to Reuters technical analyst Wang Tao. dollar index .DXY , which measures the greenback against a basket of currencies, was down about 0.1 percent at 94.890.

A stronger greenback makes dollar-denominated gold more expensive for holders of other currencies.

Holdings of SPDR Gold Trust GLD , the world's largest gold-backed exchange-traded fund, fell 0.03 percent to 951.81 tonnes on Wednesday. GOL/ETF

Spot silver XAG= climbed 0.6 percent at $19.87. It touched its highest in over three weeks in the previous session.

Platinum XPT= rose 0.6 percent to $1090.95, after hitting a two-week peak on Wednesday. Palladium XPD= was up 1 percent at $694.30. It touched an over-two week high in the prior session.

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