LONDON (Reuters) - Gold rose on Thursday, after a drop to seven-week lows the previous day, with a rising euro and prospects of further monetary stimulus lending support to prices. Spot gold was up 0.8 percent at $1,715.8 an ounce at 1212 GMT, bouncing off Wednesday's seven-week low of $1,698.39. U.S. gold futures for December delivery were up $16.20 an ounce at $1,717.80. Bullion had rallied steadily to an 11-month peak topping $1,795 an ounce in early October with the U.S. Federal Reserve's latest program of purchasing mortgage-backed debt fuelling investment in the metal. But momentum has stalled since then, leaving prices vulnerable to swings in wider markets, with weak European economic data and poor corporate earnings helping send prices below $1,700. However, the Fed's repeated promise on Wednesday to keep rates near zero until mid-2015 and pledge to support growth while the recovery strengthens has underpinned the bedrock supportive factor of a low interest rate backdrop for gold. Also speculation is growing that the Bank of Japan will unveil further monetary stimulus at its policy meeting on October 30 to help the export-focused economy through a global slowdown. "The major thing to look out for is what central banks are doing. Central bank moves are more important," said Christin Tuxen, analyst with Danske Bank. "With interest rates set to be low over a period of time, gold is set to perform well in the near term," she added. Ultra-low interest rates increase the appeal of gold, as it carries no yield and investors rely on a rise in the underlying price for a return on their investment. Commerzbank said in a note to clients that bullion remained vulnerable to losses, given the steep falls seen, adding that short term market players might well sell more of their positions. "However, we envisage a renewed rally over the coming weeks, given the central bank's ultra-expansionary monetary policies and the likely post-election problems in the U.S. with the looming fiscal cliff and the debt ceiling." The lower prices were also drawing in new buyers, with dealers anticipating a pickup in demand from India before the festive season peaks next month with Diwali. Weddings also take place during this period, with gold jewellery an essential part of the dowry from Indian parents. The second half of November is an auspicious period for weddings in India. CENTRAL BANK SALES On central bank activity, IMF data showed Venezuela and Russia cut holdings, taking advantage of the historically high price of gold. Venezuela cut its gold holdings by 3.733 metric tonnes in August, data from the International Monetary Fund showed on Thursday, bringing its bullion reserves to 362.053 tonnes. The IMF's monthly statistics report also showed that Russia reduced its reserves by 2.177 tonnes in September to 934.557 tonnes. "It is an indication that at these levels central banks are trying to take a bit of profit on their holdings," Tuxen said. From a technical perspective, analysts who study past price patterns for clues on the next direction of trade flag up support at the psychological level of $1,700 an ounce, despite the brief dip below that on Wednesday. "For a short period, the brief dip below $1,700 on Wednesday is not really important," said Andreas Daniel of Heraeus, adding that prices were likely to hold for now. Silver was up 1.45 percent at $32.12 an ounce, while spot platinum was up 1.16 percent at $1,572.49 an ounce and palladium was up 2.13 percent at $601.97 an ounce.

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