SYDNEY (Reuters) - Gold steadied after recovering lost ground in Asian trading on Friday, supported by the European Central Bank's bigger-than-expected interest rate cut, which pressured the U.S. dollar lower and prompted bullion buying.
The gains, while modest, counter emerging anti-inflationary signs that typically erode bullion's investment appeal as a protector of wealth during periods of financial uncertainty.
Spot gold was fetching $767.30 a ounce by 0158 GMT even with New York's late Thursday price.
Gold was finding buyers due to the weaker U.S. currency, which was falling against the euro as some investors lauded a bolder-than-expected rate cut of 0.75 percentage points by the European Central Bank as a proactive step to fight off a deep recession in the 15-nation region, bullion dealers said.
However, gold's appeal as a hedge against inflation suffered a setback after the broad-based commodity index Reuters/Jefferies CRB dropped overnight to a six-year low, led by a 6 percent fall in crude oil futures.
After peaking at $830.99 last week, gold has retreated to around $770, which is 28 percent below bullion's all-time high of $1,030.80 hit in March.
"This follows a period of low volatility and consolidation for the metal as prices traced out a small triangle reversal pattern," Sydney research group Fat Prophets said.
"Following the initial break higher, we were looking for a short-term target of $858, however, a period of choppy consolidation between $750 and $840 is now a more likely outcome," it said in a report.
U.S. gold futures for February delivery rebounded in electronic trade to $768.80 an ounce after settling down $5.00 at $765.50, on the COMEX division of the New York Mercantile Exchange.
Australia dollar gold was fetching A$1,193.07 an ounce versus A$1,186.95 late on Thursday. Australia dollar gold hit a record high of A$1,41.30 on Oct 8.
Spot platinum was selling for $790.00 an ounce against $786.50 late on Thursday.
Spot palladium was fetching $167.00 an ounce versus $166.50, while spot silver gained 1 cent to $9.47 an ounce.
