Gold dips on firmer dollar; market awaits BoE policy decision
Gold slipped further on Thursday as the dollar firmed on the back of strong economic data and Asian stocks ticked up ahead of the Bank of England’s expected rate cut later in the day.
Investors bet the BoE would cut interest rates for the first time in more than seven years to ward off recession following Britain’s vote in June to leave the European Union.
The central bank is expected to halve its benchmark interest rate to a record low of 0.25 percent when it makes a monthly policy statement at 1100 GMT.
Spot gold was down 0.4 percent at $1,352.10 an ounce by 0340 GMT, after declining 0.4 percent in the previous session.
U.S. gold fell 0.5 percent to $1,358.60 an ounce.
“Investors are convinced that the central banks have to provide more stimulus measures sooner or later. Because of that the trading range of $1,300-$1,400 could be more robust in the medium term,” said Mark To, head of research at Hong Kong’s Wing Fung Financial Group.
“There is no quite significant breakthrough or selling to destroy the trading pattern.”
Spot gold is expected to test a support at $1,350 per ounce, a break below which could cause a loss into a range of $1,342-$1,346, Reuters technical analyst Wang Tao said.
The dollar bounced back from Tuesday’s six-week low against a basket of six major currencies as investors looked forward to U.S. payrolls data for July on Friday. A rebound in oil prices from four-month lows lifted Asian stocks.
The dollar index was firm at 95.550.
A report from payrolls processor ADP on Wednesday showed U.S. private employers added 179,000 jobs in July, a tad above market expectations and bolstering hopes that Friday’s non-farm payrolls data could show moderate growth in employment.
“We remain constructive on gold, at least going into Thursday’s session where the BoE’s expected easing could give the precious metal a bit of a lift,” INTL FCStone analyst Edward Meir said in a note.
“However, we could run into some selling on Friday if the U.S. non-farm payroll number exceeds estimates.”
Chicago Federal Reserve Bank President Charles Evans on Wednesday offered a lukewarm endorsement of an interest rate increase later this year.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.03 percent to 969.65 tonnes on Wednesday.
Among other precious metals, spot silver was down 0.8 percent at $20.19, while spot platinum and palladium fell 0.4 percent and 0.5 percent to $1,154.30 and $705, respectively.
Source: Reuters
