By Marcy Nicholson and Jan Harvey
NEW YORK/LONDON (Reuters) - Gold rebounded by more than 1 percent on Thursday as the euro bounced back from a six-week low against the dollar after European Central Bank (ECB) chief Mario Draghi indicated that further interest rate cuts in the euro zone are unlikely.
Both the single currency and bullion prices had fallen earlier in the day after the ECB reduced interest rates and expanded its bond-buying program in an attempt to boost growth and inflation in the currency bloc.
That sent spot gold > to a low of $1,237.06 an ounce, but by 2:46 p.m. EST (1946 GMT) it had gained 1.4 percent to $1,270.10. U.S. gold futures
The ECB dropped its main refinancing rate to zero on Thursday, from 0.05 percent, while expanding its quantitative easing asset-buying program to 80 billion euros ($88.7 billion) a month from 60 billion euros and cutting its deposit rate to -0.4 percent from -0.3 percent.
That initially sent the euro sharply lower, but the currency recovered to a three-week high against the dollar after Draghi said the bank did not expect that it would be necessary to cut rates further.[USD/]
Global stock markets fell, another supportive factor for gold prices, traders said.
"This was seen as maybe a prelude to further stimulus, but the fact that there has now been a line drawn under that is giving some comfort to the euro, and therefore to gold," Mitsubishi analyst Jonathan Butler said.
"The attention now turns to what the Fed is going to do next week. Looking at the Fed futures market now, the money seems to be on a September rate rise, which is quite a change from a couple of weeks ago."
On Wednesday, holdings of the world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares
Technically, gold prices look strong as well.
"The open and close of yesterday is contained within the open and close of today, so that's a bullish scenario. This suggests a little more strength here," said Eli Tesfaye, senior market strategist for brokerage RJO Futures in Chicago, adding that the market is eyeing $1,300.
"The violence with which this market is rallying suggests the momentum is with the bulls right now."
In other precious metals, silver > rose 1.8 percent to $15.56 an ounce, platinum > fell 0.3 percent to $975 and palladium > was up 0.8 percent at $568.
(Additional reporting by Manolo Serapio Jr; editing by Mark Potter, David Goodman and Diane Craft)
