LONDON, Aug 7: Gold edged higher in Europe on Thursday as the dollar softened against the euro ahead of a rate-setting meeting of the European Central Bank later in the session, and as oil prices rose.

Platinum steadied after a rise in prices fuelled by strike action in South Africa on Wednesday ended a three-session slide that drove prices down some $180 an ounce to six-month lows.

Gold edged up to $882.20/883.20 an ounce from $878.70/879.90 late in New York. Earlier this week the precious metal dropped to a seven-week low as part of a broader commodities sell-off fuelled by a firmer dollar.

The dollar weakened broadly on Thursday, as oil prices bounced back from three-month lows, prompting traders to take profits.

Gold typically moves in the opposite direction to the dollar, as it is often used as a hedge against weakness in the US currency.

The euro firmed a touch against the US currency ahead of the ECB’s rate-setting decision later in the session, and ECB president Jean-Claude Trichet’s accompanying press conference.

While the bank is widely expected to leave rates on hold at 4.25 per cent, the markets will be focused on Trichet’s comments for clues as to future ECB policy.

The ECB press conference could move markets and might have an impact on gold via the (foreign exchange) market, said Dresdner Kleinwort in a note.

Platinum steadied after Wednesday’s price rise, which came on the back of a South African strike and renewed confidence in the sector sparked by Xstrata’s $10 billion bid for Lonmin.

Traders remain worried about the outlook for the car industry, source of 50 per cent of platinum demand, however.

The world’s biggest carmaker, Toyota, reported a 28 per cent drop in quarterly net profit on Thursday, which it blamed in part on slumping US sales.

Spot platinum was steady at $1,594.50/1,614.50, unchanged from its level late in New York on Wednesday.

Spot palladium edged up to $352.00/356.00 an ounce from $349.50/357.50 late in New York. Silver climbed to $16.60/16.65 an ounce from $16.51/16.57.

—Reuters