* Silver dips, has gained 16% since May lows
* ECB decision at 1145 GMT, Draghi speaks at 1230 GMT
By Karthika Suresh Namboothiri
July 25 (Reuters) - Gold held steady on Thursday in cautious trading before a European Central Bank meeting where the bank is expected to provide clarity on its stance on monetary policy easing amid tepid economic data from the region.
Spot gold XAU= was up 0.1% to $1,426.70 per ounce as of 1129 GMT. Prices were short of last week's peak at $1,452.60.
Meanwhile, U.S. gold futures GCcv1 rose 0.2% to $1,426.80 per ounce.
"If we have a bit of a weaker dollar on the back of the ECB meeting, this might provide some support to gold. I still see the Fed in the driving seat rather than the other central banks," said Julius Baer analyst Carsten Menke.
"The underlying driver for gold is that we are experiencing global growth worries, and expectations of interest rate cuts have lured people back into the safe haven markets. We can assume that a lot of good news is priced in with prices trading well above $1,400."
Money markets are pricing in a 50% chance of a 10 basis points interest rate cut by the ECB later in the session, a smaller probability than last week, but some expect President Mario Draghi will open the door for further cuts down the road or for more quantitative easing.
Euro zone business growth was much weaker than expected this month, hurt by a deepening contraction in manufacturing, and forward-looking indicators in surveys published on Wednesday suggest conditions will get worse next month, and the ECB is not expected to look past this. was also cautious in the United States, where manufacturing activity slowed to a 10-year low in early July with production volumes and purchases falling.
Futures FEDWATCH remain 100% priced for a rate cut of 25 basis points from the U.S. Federal Reserve's July 30-31 meeting and even imply an 18% chance of 50 basis points.
Gold is highly sensitive to rising interest rates, which lift the opportunity cost of holding non-yielding bullion. They also boost the dollar, in which the metal is priced.
In the day, the U.S. currency against other currencies .DXY was a touch higher at 97.737. USD/
Amongst other precious metals, silver XAG= slid 0.4% to $16.53 per ounce. Silver has gained about 16% since a near six-month low of $14.25 hit in late May.
"The key element that has been fuelling the recent rally in silver was the stretched levels of the gold-silver ratio which suggested to many traders that silver was cheap relative to gold," Menke said, adding the metal was now seeing profit-taking.
Platinum XPT= inched higher 0.7% to $881.99, while palladium XPD= edged down 0.2% to $1,537.32.