Gold price gains after biggest daily decline in a month

Gold prices ticked up on Thursday, after a rally in equity markets in the previous session on tentative signs of economic recovery as mandated shutdowns ease sparked the biggest daily fall in the metal since April 30. Spot gold rose 0.2% to $1,701.02 per ounce by 0715 GMT after a 1.7% drop on Wednesday. U.S. gold futures fell 0.1% to $1,703.70.

The market is seeing some "corrective action" after Wednesday`s steep decline, said DailyFx currency strategist Ilya Spivak. Optimism over the prospect of an economic recovery as coronavirus-related lockdown restrictions ease has dampened demand for the safe-haven metal recently, sending prices down 1.5% so far this week.

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Data on Wednesday showed U.S. private payrolls fell less than expected in May, while China`s services sector returned to growth for the first time since January.

Asian shares hit a two-month high on Thursday as government stimulus expectations lifted sentiment, curbing the appeal of gold.

"The consensus is finding it difficult to be too bullish on the yellow metal at the moment, with equity markets soaring higher by the day," said Stephen Innes, chief market strategist at financial services firm AxiCorp, in a note.

Despite improving risk sentiment, gold prices are holding above the key $1,700 an ounce level on simmering Sino-U.S. tensions, protests in U.S. cities and a weaker dollar.

The dollar index has fallen about 1% this week, with optimism over the reopening of economies around the world reducing demand for the greenback.

Market participants are now awaiting the European Central Bank`s policy decision at 1145 GMT.

The ECB is certain to give more stimulus, but there are questions over whether the bank will announce a move on Thursday or hold out until July.

Among other metals, palladium was down 0.6% to $1,937.55 per ounce, while platinum rose 0.5% to $830.04.

Silver eased for a third straight session, down 1% to $17.49.