By Jan Harvey
LONDON (Reuters) - Gold rose further from this week's 10-month low on Wednesday as the dollar eased against the euro ahead of a European Central Bank meeting, and on the view that a U.S. rate rise next week was already reflected in prices.
In November, the metal posted its biggest monthly fall in more than three years. The losing streak spilled into December as fears of U.S. rate rise, an increased appetite for risk and a stronger dollar all weighed on prices at a time of waning demand for gold from top consumers China and India.
Gold prices found good support, however, at the $1,172 level, a chart retracement of its December to July rally.
Spot gold was at $1,176.98 an ounce at 1442 GMT, up 0.6 percent, while U.S. gold futures for February delivery were $9.70 an ounce higher at $1,179.80.
"The metal lost 8 percent during the month of November, thanks to the Fed, which is expected to increase the interest rate this month," Think Markets' chief market analyst Naeem Aslam said.
"We think that the interest rate story is largely baked into the gold price, and when the Fed increases rates, we may not see much of a move."
Any shift in gold prices will likely be dictated by the currency markets. The dollar eased 0.1 percent versus the euro on Wednesday ahead of key central bank meetings.
The European Central Bank is expected to extend its quantitative easing programme when it meets on Thursday, but questions remain over whether it will scale back its monthly asset purchases and send a formal signal on the eventual end of that programme.
The Federal Reserve is expected to raise rates at its meeting next week, a move seen as negative for gold, as rising U.S. rates lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.
Gold's recovery ahead of the meeting indicates that most of the selling pressure seen previously, particularly in the futures market, has started to fade, Saxo Bank's head of commodity research, Ole Hansen, said.
"You can take a view that most of the bad news for gold has now been priced in, given the sharp sell-off and the sharp reduction we've seen in positioning," he said.
Among other precious metals, silver was up 2.4 percent at $17.12 an ounce.
Palladium was down 0.2 percent at $736, while platinum was 1 percent higher at $943.24, after hitting a more than three-week high in the previous session.
(Additional reporting by Swati Verma and Nallur Sethuraman in Bengaluru; editing by Ruth Pitchford and David Clarke)
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