Gold falls to two-week low ahead of BoE policy meeting

By Clara Denina

LONDON (Reuters) - Gold fell more than one percent on Thursday, as the dollar strengthened against the yen and global equities reached eight-month highs ahead of a widely anticipated Bank of England policy meeting.

Stock markets rose on expectations that the BOE will cut rates for the first time in more than seven years to ward off recession following Britain's vote to leave the European Union.

That curbed interest in gold as a safe haven.

Spot gold fell as much as 1.3 percent to $1,324.38 an ounce, the lowest since July 1 and was down 1.1 percent at $1,327.68 by 1011 GMT.

"Britain has got a new prime minister, which, alongside expectations of more stimulus from the Bank of England, has brought a sense of relief to markets, so gold is easing and everything else is rising on that," Citi strategist David Wilson said.

"But the whole process of Brexit negotiations, which hasn't started yet, implies financial risks that will be supportive for the metal in the medium term."

Gold touched a two-year high of $1,374.91 last week, after Britain voted to leave the European Union, as worried investors started piling their cash into safe-haven assets.

After five weeks of gains, the metal has come under some pressure following strong U.S. non-farm payrolls data on Friday, which some took as a sign boosting the prospects for an interest rate increase by the U.S. Federal Reserve.

"Major central banks including the Bank of England and the European Central Bank are expected to relax their monetary policies, while the U.S. Federal Reserve is reluctant to raise interest rates," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

Philadelphia Fed President Patrick Marker said late on Wednesday that the central bank would likely opt for a "fairly shallow" series of U.S. interest rate hikes, and that he wanted to "let it play out a bit" before backing a policy tightening.

Spot gold is biased to retest a support at $1,328 per ounce, a break below which could cause a loss to the next support at $1,313, according to Reuters technical analyst Wang Tao.

Spot palladium slipped 0.6 percent to $638.30 an ounce, after hitting an eight-month high of $647.20 in the previous session.

Silver edged down 0.7 percent to $20.21 an ounce, while platinum fell 1.3 percent to $1,083.70 an ounce.

(Additional reporting by Vijaykumar Vedala in Bengaluru; Editing by William Hardy)