* Prices extend biggest one-day rally since June * Indian demand still soft as high prices curb buying * Lonmin says will cut expenditure to safeguard cash (Updates prices, releads) By Jan Harvey LONDON, July 26 (Reuters) - Gold prices climbed to three-week highs at $1,620 an ounce on Thursday after European Central Bank President Mario Draghi said the central bank was ready to do whatever it takes to preserve the euro, boosting the single currency versus the dollar. European shares also climbed and German Bund futures fell after ECB President Mario Draghi said the euro was "irreversible", and that the currecy bloc was much stronger than many acknowledged. Spot gold was up 0.9 percent at $1,618.34 an ounce at 1111 GMT, while U.S. gold futures for August delivery were up $10.90 an ounce at $1,619.00. The metal posted its biggest one-day rise since late June on Wednesday as the euro rose on speculation the euro zone's bailout fund could be given access to central bank money and as weak U.S. data reignited talk of more quantitative easing. "Yesterday's move above $1,600 an ounce was driven by more positive sentiment towards gold on the back of growing anticipation for QE," BNP Paribas analyst Anne-Laure Tremblay said. "A move above $1,630 an ounce would be the sign of a more durable upward trend." Sharper appetite for risk and dollar softness as a result of the comments also boosting buying of other commodities. A weaker dollar versus the euro makes assets priced in the U.S. currency cheaper for other currency holders. Speculation the Federal Reserve will unleash another round of monetary easing this year has been the chief support to gold prices in recent months, after a spate of lacklustre U.S. data. Such a move would maintain pressure on long-term interest rates, keeping the opportunity cost of holding gold at rock bottom, and would likely weigh on the dollar, stoking demand for the metal as an alternative store of value. HSBC analyst Jim Steel said that gold may take its next cue from second-quarter U.S. GDP data on Friday, with the bank flagging up expectations for a growth rate of 1.1 percent. "If the growth rate... is nearer to 1.0 percent... the FOMC may move closer to a decision to provide even more monetary stimulus in the weeks and months ahead," he said in a note. "Gold has shown itself sensitive to monetary policy announcements this year and any indication of further easing would buoy gold prices." SELLING IN ASIA A rally in gold prices prompted some selling in Asia's physical gold market, but market participants feared the price rise would lose momentum as policy uncertainty keeps sentiment brittle. The world's largest gold-backed exchange-traded fund, which issues securities backed by physical precious metal, reported a 2.1 tonne outflow on Wednesday. The fund saw its biggest weekly outflow of physical metal this year last week. Silver was up 1.7 percent at $27.78 an ounce, while spot platinum was up 1.3 percent at $1,409.75 an ounce and spot palladium was up 1.5 percent at $570.66 an ounce. Platinum miner Lonmin said on Thursday it had slashed spending plans up to 2014 in order to preserve cash, as it warned poor demand and weak prices battering the sector could persist for longer than expected. South African platinum miners have been hit this year by a combination of rising costs, labour unrest and weak metals prices. However, analysts say it will be tough for them to cut production in a country where unemployment is rife and mining unions hold great sway. (Editing by William Hardy)

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