Gold retreats as equities rally, oil bounces 8%

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Gold fell on Friday as hints of more monetary stimulus from the European Central Bank weighed on the euro and pushed stocks higher, denting appetite for alternative assets.

Benchmark Brent crude futures, which had fueled risk aversion with a tumble to 12-year lows, closed out a volatile week by soaring 9 percent on Friday as traders cashed in on record short positions.

That fed into better appetite for assets seen as higher risk, such as stocks, and weighed on gold.

Spot gold was down 0.4 percent at $1,096.36 an ounce, while U.S. gold futures for February delivery closed down $1.90, or 0.2 percent, at $1,096.30. The metal rose to a two-month high of $1,112 last week as equities and oil slid.

"The flight to quality has been set aside," said Phillip Streible, senior commodities broker for RJO Futures in Chicago.

ECB President Mario Draghi said on Thursday that fading growth and inflation prospects will force the bank to review its policy stance in March, a strong signal that more easing could be coming within months.

His comments lifted the dollar 0.6 percent against the euro and prompted a rally in beleaguered stock markets.

"$1,100 to $1,115 is a tough level to overcome," said Commerzbank analyst Carsten Fritsch. "Today there is a rebound in stock markets that certainly contributed to this drop, but I wouldn't rule out another push above that level if stock markets start to tumble again."

Even with the day's loss, gold was poised to end the week higher.Bullion has benefited from the risk aversion that hurt stocks and crude oil this month, though slow physical demand from major consumers China and India kept a lid on price gains.

Gold premiums in China rose only slightly this week and sellers in India offered discounts given poor demand.

Holdings of the world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, rose a further 1.8 tonnes on Thursday, data from the fund showed. That brought its inflow for the week to 4.2 tonnes.

Among other precious metals, platinum and palladium, which are widely used in autocatalysts, and silver, a common component in electronics manufacturing, benefited from firmer appetite for industrial commodities.

Platinum was up 1.5 percent at $829.23 an ounce, rebounding from the previous session's seven-year low of $806.31. Palladium gained 0.1 percent to $499.00.

Silver eased 0.3 percent to $14.02 an ounce.