* Falling stock markets spur interest in gold
* Wall Street suffered worst one-day fall since 2011
* ECB keeps policy unchanged even as growth wanes
* Palladium moves away from Tuesday's record high (Updates prices, adds details)By Swati VermaBENGALURU, Oct 25 (Reuters) - Gold edged lower on Thursday,with some investors taking advantage of a recent surge in pricesto lock in profits.Spot gold was down 0.2 percent at $1,231.28 an ounceby 1329 GMT, having on Tuesday hit a more than three-month highof $1,239.68, spurred by a global stock market sell-off whichdrove interest in the metal considered a safer store of valueduring times of political and financial uncertainty.
U.S. gold futures were up 0.2 percent at $1,233.9 anounce."Gold is pausing for breath and is probably consolidatingfor the next possible move higher. Some speculative investorswould be in a position to take profit," said Mitsubishi analystJonathan Butler.
"It is running into some resistance around $1,240. The nextsignificant level is the $1,250 psychological barrier," Butleradded.
Gold prices have gained more than 3 percent so far thismonth, on track to break a six-month losing streak, the longestsince a downturn that ran from the start of August 1996 to theend of January 1997.European shares attempted to rebound on Thursday after WallStreet suffered its worst day since 2011.
But global stocks are still on course for their worst monthsince the financial crisis a decade ago, as investors becomeincreasingly nervous about lofty valuations, faster rate hikesin the United States and a Sino-U.S. trade war. SPECULATIVE POSITIONS
"Further equity weakness is likely to entice participantsinto the precious (metal) complex over the near term," tradersat MKS PAMP said in a note.They said gold could also move higher if speculativeinvestors who have in recent months ramped up bets on lowerprices are forced to abandon their positions.
Meanwhile, the European Central Bank kept policy unchangedas expected, on course to claw back unprecedented stimulus evenas the growth outlook continues to darken and political turmoillooms in Italy. Gold briefly turned positive as the dollar moved lowerversus the euro after ECB chief Mario Draghi said wageincreases were not temporary and expressed confidence aboutinflation reaching the bank's target. Another sign of rising interest in gold was higher inflowsinto the world's largest gold-backed exchange-traded fund, SPDRGold Trust .
Holdings in the fund, which saw outflows of about 4.5million ounces between late April and early October, have risento their highest since the end of August. In other precious metals, palladium fell 1.7 percentto $1,105.60 an ounce, drifting away from a record high of$1,150.50 an ounce hit on Tuesday.
Silver gained 0.1 percent to $14.65 per ounce, andplatinum was up 0.1 percent at $827.90 per ounce. (Reporting by Swati Verma in BengaluruEditing by Mark Potter and David Holmes)
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