Gold hovers below $1,660/Oz; eyes on ECB

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Gold was little changed on Thursday, with investors eying a key resistance level just above US$1,660 an ounce and awaiting a rate decision by the European Central Bank at its policy meeting later in the day.

The ECB is expected to hold interest rates unchanged, but economists have mixed views on the chances of a rate cut in the next few months due to a murky economic outlook.

Central banks' monetary stimulus was a key driver behind gold's twelfth year of annual gains in 2012, as investors concerned about the side effects of rampant cash printing fled to bullion to hedge against inflation.

Gold has been moving in a narrow range of about US$25 this week, with the upside capped by signs that the United States might end its easy money policy. Physical buying in Asia has helped support prices above US$1,640 an ounce.

Gold dropped to a more than four-month low below US$1,630 an ounce last week after minutes from the US Federal Reserve's last meeting showed officials were concerned about the side effects of its bond buying programme.

"The market got a little concerned about how aggressive the Fed will be," said Jeremy Friesen, commodity strategist at Societe Generale in Hong Kong, adding that the market is expected to rebound.

SocGen expected gold to average US$1,700 an ounce in the first quarter of the year, as well as in 2013.

Spot gold was little changed at US$1,656.44 an ounce by 0307 GMT, below the key resistance of the 200-day moving average at US$1.661.05.

US gold traded nearly flat at US$1,656.50 an ounce.

Technical analysis suggested that spot gold could retrace to US$1,642.14 an ounce during the day, said Reuters market analyst Wang Tao.

The dollar index inched higher, on course for its third day of gains. A stronger greenback makes dollar-priced commodities less affordable for buyers holding other currencies.

Robust purchases on the physical bullion market in Asia were showing signs of slowing down, after prices settled in a range, dealers said.

"Prices have been at the current level for a week or so, and we will see some slowdown in physical buying, unless prices go down to US$1,640 or US$1,650," said a Singapore-based trader.

In other metals, spot platinum inched up 0.2 percent to US$1,594.25 an ounce, just off a three-week high of US$1,599 hit in the previous session.

Spot palladium rose 0.4 percent to US$685.99.

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