June 8, 2017 / 10:49 AM / a year ago

PRECIOUS-Gold falls after ECB decision; awaits UK poll, Comey details

    * Investors to play catch-up, allocations to gold still
small -UBS
    * ECB keeps money taps open, drops reference to rate cuts
    * Market awaits ex-FBI director's testimony to Congress

 (Adds quote on palladium, updates prices)
    By Eric Onstad
    LONDON, June 8 (Reuters) - Gold slipped on Thursday after
the euro lost ground against the dollar and as investors awaited
the outcome of Britain's national election and testimony from
former U.S. FBI director James Comey. 
    The euro        declined after the European Central Bank cut
its forecasts for inflation and said that policymakers had not
discussed scaling back its massive bond-buying programme.
    A weaker euro versus the dollar erodes the buying power of
euro zone investors for gold, which is priced in the U.S.
    Spot gold        was down 0.9 percent at $1,275.06 an ounce
at 1355 GMT. U.S. gold futures         for August delivery shed
1.2 percent to $1,277.40.
    Investors were awaiting British election results and Comey's
testimony, which will turn the spotlight on a clash between him
and U.S. President Donald Trump.                               
    Those and other uncertainties are providing support to gold,
which is likely to resume its rally eventually, even if its
correction lower extends in the short term, said Ole Hansen,
head of commodity strategy at Saxo Bank in Copenhagen.
    "It's quite natural that we see markets taper off some of
the recent gains," he said. "The sentiment on the market at the
moment is that gold is a 'buy on dips'. The question is whether
we'll see a dip of any size once there's more clarity following
today's events."
    Hansen advised buying if gold declined to key short-term
support at $1,265. 
    UBS strategist Joni Teves agreed that a growing list of
global uncertainties along with macro forces are expected to
push gold higher, so any dips would be an opportunity to build
or add to positions. 
    "We think that investor allocations to gold remain small
compared with other assets. An extension of gold's gains up
ahead raises the risk that many would have to play catch-up,"
she said in a note. 
    In other precious metals, palladium        climbed 1.9
percent to $849.75 an ounce. In the previous session it hit its
highest in nearly three years but shed its early gains to end
2.3 percent lower.     
    Commerzbank technical analyst Karen Jones advised bullish
investors to be wary of the palladium market.
    "It will shortly encounter the 16-year resistance line at
$867/68 and, with a 13 count on the daily chart, we would
tighten up stops (on long positions) considerably," she said in
a note.
    Platinum        fell 0.9 percent to $933.24 while silver
       lost 1 percent to $17.37. 

 (Additional reporting by Vijaykumar Vedala and Koustav Samanta
in Bengaluru; Editing by David Evans and David Goodman)
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