* ECB will deliver its policy decision at 1145 GMT
* Dollar pinned near multi-week lows, Treasury yields below
1.6%
* Palladium hovers near record high of $2,891.20/oz
(Recasts, adds comment, updates prices)
By Sethuraman N R
April 22 (Reuters) - Gold prices eased from a two-month high
on Thursday ahead of the European Central Bank's rate decision,
while supply worries kept palladium near a record peak hit in
the previous session.
Spot gold was down 0.3% at $1,788 per ounce by 0927
GMT, after hitting its highest since Feb. 25 at $1,797.67. U.S.
gold futures were down 0.35% at $1,787 per ounce.
"We will see another shot at $1,800 as the sentiment has
improved. We have not seen any further exchange traded fund
outflows," Commerzbank analyst Carsten Fritsch said.
"There is also a perception that central banks are not going
to do anything in changing the ultra-loose monetary policy ...
the effect of that is rising gold prices," he added.
The ECB is not expected to change policy when it meets later
on Thursday, but analysts say this meeting will set the stage
for June, when policymakers have to decide whether to slow bond
buying.
The benchmark 10-year U.S. Treasury yield was
pinned below 1.6%, reducing the opportunity cost of holding
non-yielding bullion. The dollar index held near
multi-week lows against most major currencies.
"There is slightly weaker physical demand (for gold) at
these higher prices, plus some more secondary scrap is likely to
be appearing," said Nicholas Frappell, global general manager at
ABC Bullion.
Meanwhile, palladium eased 1.5% to $2,830 an ounce,
having surged to an all-time high of $2,891.20 per ounce on
Wednesday.
Higher palladium prices reflect the tight supply situation,
Commerzbank's Fritsch said, adding the palladium market is set
to show a sizeable supply deficit this year, partly on account
of the robust demand from the automotive industry.
Silver fell 0.9% to $26.32 per ounce and platinum
was down 1.1% at $1,200.60.
(Reporting by Nallur Sethuraman in Bengaluru; Editing by
Shounak Dasgupta)
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