Gold slips from 5-month high as dollar, shares climb on ECB move

LONDON, Jan 23 (Reuters): Gold fell on Friday, pulling back from a five-month high, as the euro hit an 11-year low against the dollar and shares rose after the European Central Bank announced a multi-billion euro bond-buying programme to revive the sagging euro zone economy.

The metal, often seen as a hedge against inflation, jumped more than one per cent above $1,300 an ounce on Thursday after the ECB pledged to spend more than 1 trillion euros to boost growth and ward off deflation.

But prices have since pared some of those gains as the impact of a stronger dollar that makes dollar-denominated assets more expensive for foreign investors prevailed.

"Gold was completely dislocated from the dollar yesterday, meaning that euro-gold is the best performing commodity this year, helping dollar gold stay fairly stable around $1,300," Saxo Bank senior manager Ole Hansen said.

"But that strength in the dollar is now proving too much."

Spot gold was down 0.5 per cent at $1,294.70 an ounce by 1101 GMT. Bullion peaked at $1,306.20 on Thursday, its highest since Aug. 15, and was still headed for a third straight weekly gain.