*Benchmark Brent crude futures LCOc1, which had fuelled risk aversion with a tumble to 12-year lows, closed out a volatile week by soaring 9 percent on Friday as traders cashed in on record short positions.
*That fed into stronger appetite for assets viewed as higher risk, such as equities and industrial commodities, and weighed on gold.
*Spot gold XAU= was down 0.6 percent at $1,095.16 an ounce at 2 p.m. EST (1900 GMT), while U.S. gold futures GCv1 for February delivery closed down $1.90, or 0.2 percent, at $1,096.30. The metal rose to a two-month high of $1,112 last week as equities .SPX .MIWD00000PUS and oil slid.
*”The flight to quality has been set aside,” said Phillip Streible, senior commodities broker for RJO Futures in Chicago.
*ECB President Mario Draghi said on Thursday that fading growth and inflation prospects will force the bank to review its policy stance in March, a strong signal that more easing could be coming within months.
*His comments lifted the dollar 0.6 percent against the euro EUR= and prompted a rally in beleaguered stock markets.
*”$1,100 to $1,115 is a tough level to overcome,” said Commerzbank analyst Carsten Fritsch. “Today there is a rebound in stock markets that certainly contributed to this drop, but I wouldn’t rule out another push above that level if stock markets start to tumble again.”
*Even with the day’s loss, gold was poised to end the week higher. Bullion has benefited from the risk aversion that hurt stocks and crude oil this month, though slow physical demand from majorconsumers China and India kept a lid on rate gains.
*Gold premiums in China rose only slightly this week and sellers in India offered discounts given poor demand.
*Holdings of the world’s largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares (GLD), rose a further 1.8 tonnes on Thursday, data from the fund showed. That brought its inflow for the week to 4.2 tonnes.
*Among other precious metals, platinum and palladium, which are widely used in auto catalysts, benefited from firmer appetite for industrial commodities.
*Silver XAG= eased 0.3 percent to $14.02 an ounce. ~ Neal Bhai Reports