Gold prices fell on Thursday as a stronger dollar and weaker oil and stock markets prompted some investors to cash in gains after the previous day's 6-1/2 month high, though the positive impact of recent central bank stimulus measures limited losses. The metal rose as high as USD 1,779.10 an ounce on Wednesday as the Bank of Japan became the latest to unveil another round of monetary easing, after bond-buying programmes were announced in the United States and euro zone earlier this month. Monetary easing tends to benefit gold by keeping up pressure on long-term interest rates, and consequently the opportunity cost of holding bullion, as well as weighing on the dollar, stoking longer-term inflation fears, and boosting liquidity. Spot gold was down 0.5 percent at USD 1,759.89 an ounce at 1126 GMT, while U.S. gold futures for December delivery fell USD 9.20 an ounce to USD 1,762.60. "The lack of follow-through following the BoJ announcement of additional stimulus yesterday seems to indicate that investors have what they need at this stage, and a correction might be required to attract additional demand," Saxo Bank vice president Ole Hansen said. "Physical demand looks lacklustre, so it is purely up to the investment community to drive this forward." The euro fell to a one-week low against the dollar and dropped sharply against the safe-haven yen on Thursday after disappointing euro zone business activity data stoked concerns about a deepening recession in the region. European shares slid meanwhile as weak Chinese manufacturing data revived global growth concerns, while euro zone banks suffered from uncertainty over if and when Spain would apply for a bailout. Crude oil fell as much as USD 1 a barrel. "The rise in gold and silver will be tempered by drops in the stock market and rises in the dollar, and if this continues then the upside is limited for the time being," Marex Spectron said in a note. "However support remains under the market and I still believe buying dips is the way forward in the longer term." RESISTANCE MET In a note, technical analysts at Societe Generale, who study past price patterns for clues as to the future direction of trade, said gold had reached descending channel resistance "which has been shaping for a year now" at USD 1,777. They said in the short term, the metal has broken the steep channel support line in place since early September. "A further correction will develop to USD 1,756/53 then USD 1,745 and USD 1,736," they wrote. Holdings of gold exchange-traded funds - popular investment vehicles which issue securities backed by physical bullion - eased back from record highs with an outflow of 607,000 ounces on Wednesday, Reuters data showed. Outflows were seen from products operated by London-based ETF Securities and Zurich Cantonalbank. "Judging by the broader commodity market, QE3 euphoria from last week is now over," VTB Capital said in a note. "Yet we... remain bullish in the long run, given the debasement of major fiat currencies as interest rates remain subdued, while liquidity boosts... will bring about inflation concerns." Among other precious metals, silver was down 0.9 percent at USD 34.28 an ounce, while spot palladium was down 0.8 percent at USD 661.47 an ounce. Spot platinum was down 1.5 percent at USD 1,608.30 an ounce. The metal has fallen 5.3 percent so far this week, on track for its biggest weekly drop since December, as strike action at third largest miner Lonmin wound down. Thousands of miners at Lonmin's Marikana operations in South Africa returned to work on Thursday after a hefty pay hike ended a six-week strike, but nearby mines faced more industrial action with workers demanding similar raises. Forty-six people died during the wildcat strike at Lonmin, while threats of supply constraints pushed platinum price more than 20 percent higher.

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