By Clara Denina
LONDON (Reuters) - Gold edged above a three-week low on Thursday, as the dollar slipped and European shares also fell ahead of a European Central Bank policy meeting due later in the day.
The European Central Bank is all but certain to keep rates firmly on hold on Thursday but will have to address an ever growing list of obstacles that threaten once again to derail its efforts to revive growth and inflation.
Uncertainty about future policy measures could favour gold as an alternative safe asset, analysts said.
"Should the central bank signal a more accommodative policy, we could see gold get a bit of a lift despite the fact that the dollar could strengthen as a result," said INTL FCStone in a note.
Spot gold rose 0.4 percent to $1,320.96 an ounce by 0903 GMT, after touching $1,310.56, its lowest since June 28.
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U.S. gold was down 0.1 percent at $1,317.50 an ounce.
The dollar index, which hit a more than four-month high on Wednesday, slipped 0.3 percent against a basket of six currencies, also on reports that Bank of Japan Governor Haruhiko Kuroda has ruled out the idea of using "helicopter money" to stimulate Japan's economy.
The U.S. currency had benefitted from stronger-than-forecast economic data lately, which raised expectations that the Federal Reserve may raise rates before the end of the year.
Gold is highly sensitive to rising rates, which increase the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.
"The chief factor impacting gold is the Fed's decision about the interest rate hike," ThinkMarkets chief analyst Naeem Aslam said.
"Recent data and ...earning season has stimulated speculations that another rate hike is back on table and the odds of such will go even higher if the non-farm payrolls next month print another robust number."
Spot gold has found a support at $1,313 per ounce, and may hover around this level temporarily before falling towards the next support at $1,298, according to Reuters technical analyst Wang Tao.
Spot silver, which fell in the last five sessions, rose 0.5 percent to $19.49 an ounce.
Platinum, which hit a two-week low on Wednesday, was up 0.4 percent at $1,084.75.
Palladium, which hit its highest in nearly nine months on Wednesday, was up 0.3 percent at $671.80.
(Additional reporting By Nallur Sethuraman and Vijaykumar Vedala in Bengaluru; Editing by William Hardy)