PRECIOUS-Gold hits three-week low after ECB rate cut, U.S. data
* European Central Bank cuts interest rates to record low
* Stock markets climb, dollar jumps 1.1 pct vs euro
* U.S. Q2 growth data beats expectations
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LONDON, Nov 7 (Reuters) - Gold fell to a three-week low on Thursday, surrendering initial gains made after the European Central Bank cut interest rates to a record low, as a sharp rise in the dollar outweighed the impact of looser monetary policy.
Lower interest rates tend to benefit gold, as they cut the opportunity cost of holding non-yielding bullion, while stoking fears of inflation in the longer term.
However, gold has proved sensitive recently to pressure from a stronger dollar. The U.S. unit hit a seven-week high against the euro after the ECB move, and extended gains after third-quarter U.S. growth data beat consensus.
Spot gold was down 0.8 percent at $1,307.86 an ounce at 1504 GMT, having earlier risen as high as $1,325.31 an ounce. U.S. gold futures for December delivery were down $9.40 at $1,308.40.
"The ECB statement and the rate cut still suggest that the European Central Bank is a long way away from tightening, underlining the fact that the Fed will have to move (to tighten policy) first," VTB Capital analyst Andrey Kryuchenkov said.
"The U.S. numbers were fairly decent... overall GDP (was) still better than expected."
Gold prices have fallen 20 percent this year on expectations that the Federal Reserve would taper its economic stimulus programme. Investors are keenly awaiting key U.S. data this week for clues as to when this will happen.
Analysts say Friday's U.S. jobs report for October may provide the most telling insight into the impact of a government shutdown last month that may provoke an extended continuation of Fed bond-buying which undermines the dollar.
"The U.S. payrolls data is going to be important," Credit Suisse analyst Karim Cherif said. "A negative footprint would re-launch a discussion on when Fed tapering will start."
EUROPEAN STOCKS JUMP
European shares hit a five-year high on Thursday after the surprise rate cut by the ECB, as traders bet a weaker euro and easier lending conditions would help revive the region's economy. Wall Street stocks opened flat.
Gold investment interest firmed on Wednesday, with holdings of the SPDR Gold Trust, the largest gold-backed ETF, rising 2.1 tonnes to 868.42 tonnes - the first increase since Oct. 22.
But the fund, whose purchases of gold are a reflection of a rising investor interest in the metal, has seen over 450 tonnes in outflows this year, driving holdings to their lowest since early 2009.
Such outflows from gold ETFs have had a significant impact on prices this year. Expecting a scale back in stimulus measures, investors have been shifting money out of gold and into equities.
Spot silver was down 0.9 percent at $21.58 an ounce.
Spot platinum was down 0.7 percent to $1,451.24 an ounce, and spot palladium was down 0.9 percent to $755.25 an ounce, having hit its highest level since Aug. 15 at $762.25 in earlier trade.
(Additional reporting by Clara Denina; Editing by William Hardy)