* ECB President's news conference due at 1330 GMT
* Markets await Dec. 18-19 FOMC meeting
* GRAPHIC-2018 asset returns:
(Updates prices, adds details)
By Swati Verma
BENGALURU, Dec 13 (Reuters) - Gold fell on Thursday as stock
markets gained for a third straight day, but the metal held in a tight
range ahead of next week's Federal Open Market Committee meeting when
the U.S. central bank is widely expected to raise interest rates.
Meanwhile, palladium touched a fresh record high, trading at a
premium to bullion, buoyed by a sustained deficit and hopes of fresh
demand from the auto sector.
Spot gold eased 0.2 percent to $1,242.79 per ounce at 1256 GMT,
but was trapped in a $6 range, while U.S. gold futures
were down 0.2 percent at $1,247.10 per ounce.
"Next week we have the FOMC rate decision, and it has been
pretty much priced in that we are going to have a rise. But if we see
the Fed hold off that rate hike in the light of rising inflation and
other macroeconomic concerns, gold could be boosted by that,"
said Mitsubishi analyst Jonathan Butler.
Investors' focus will be on how much further the U.S. Federal
Reserve might lift rates next year.
"We would have a bit more guidance on that next week when the
FOMC meets. But it does seem that the Fed is adjusting from more
aggressive rate hikes, three or more, to a somewhat toned down
approach," Butler said.
Higher rates make non-yielding bullion less attractive, and tend
to boost the dollar, in which gold is priced, making it more expensive
for holders of other currencies.
Meanwhile, equity markets rallied on signs of easing trade
tensions between the United States and China.
"With equities rebounding this week, gold has fallen slightly
out of favour as traders unwound their safe haven bets," said
Fawad Razaqzada, an analyst with Forex.com.
Gold's direction in the near term would be determined by moves in
the greenback, which could be pressured if the Fed takes a more
cautious approach, analysts said.
"Gold's recent breakout above the $1,240 resistance means the
path of least resistance is still to the upside and it should get a
lift if the dollar were to fall on the back of a dovish Fed,"
Meanwhile, gold's reaction to the European Central Bank's decision
to formally end its 2.6 trillion euro ($2.95 trillion) bond purchase
scheme was muted.
Attention now turns to ECB President Mario Draghi's news
conference at 1330 GMT.
Among other precious metals, spot palladium was down 0.5
percent at $1,255.90 per ounce, having touched a record high of
$1,269.25 earlier in the session.
The autocatalyst metal rose strongly on news that China would be
reducing tariffs on U.S. imported autos, raising hopes that the sector
would be boosted by additional demand, analysts at ANZ said in a note.
Silver was down 0.2 percent at $14.71 per ounce, while platinum
was steady at $798.40.
(Reporting by Swati Verma in Bengaluru; Editing by Adrian Croft and
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