* Euro recovers ground lost after loose policy reaffirmed
* SPDR Gold Trust holdings fall to lowest since early Feb
* GRAPHIC-2017 asset returns: http://tmsnrt.rs/2jvdmXl
(Releads, updates prices, adds comment) LONDON, July 20 (Reuters) - Gold prices recovered lost ground to edge higher on Thursday after European Central Bank President Mario Draghi said ECB policymakers would discuss potential changes to the bank's bond-buying scheme in the autumn, lifting the euro to session highs. Draghi said the policymakers were unanimous in choosing not to change their guidance for monetary policy, and not to set a date for discussing changes to its stimulus programme. However, he flagged further discussions later in the year. That was enough to spark a recovery in the euro after early losses, lifting gold prices.
Spot gold was up 0.1 percent at $1,241.10 an ounce at
1240 GMT, off an earlier low of $1,234.74. "Draghi's speech was essentially dovish, emphasising a 'very substantial degree of accommodation' and reaffirming the commitment to quantitative easing," Mitsubishi analyst Jonathan Butler said. "The ECB will defer the decision on QE tapering until the autumn the euro gained ground on this news and the resulting fall in the dollar helped gold recover from some of its earlier losses," he added.
U.S. gold futures for August delivery were 0.1
percent lower at $1,240.10 an ounce, off a low of $1,234.60. The maintenance of loose monetary policy in the euro zone could be seen as either positive or negative for gold, depending on whether demand responds positively to a persistently low opportunity cost of holding the non-yielding metal or more negatively to a weaker euro. The ultra-low interest rates in place since the last decade's global financial crisis have been a key factor in supporting gold prices in recent years. With the end to that unprecedented monetary stimulus now within sight, financial investors are nervously trying to gauge how big central banks around the globe will unwind unconventional policies that have kept borrowing costs ultra low. Holdings of the world's largest gold-backed exchange-traded
fund, SPDR Gold Shares , fell 5.3 tonnes on Wednesday to
816.1 tonnes, the lowest level since early February. Its reserves have declined more than 12 tonnes so far this week. "In terms of investment demand, the physically backed products have seen outflows recently rather than inflows, so there hasn't been much support from that side," Julius Baer analyst Carsten Menke said.
Among other precious metals, silver was up 0.3
percent at $16.28 an ounce after touching its highest in over two weeks at $16.36 in the previous session.
Platinum was 0.4 percent higher at $921.70 an ounce, while palladium was down 1.2 percent at $846.10 an ounce.
It hit a three-week high of $872.25 an ounce on Wednesday.
(Reporting by Jan Harvey; additional reporing by Nithin Prasad and Arpan Varghese in Bengaluru; Editing by Edmund Blair, Greg Mahlich)