Gold prices drop ahead of ECB meeting

Big 5

Gold prices edged lower on Thursday, with the dollar steady as markets looked to a meeting of the European Central Bank later in the day for clues on the outlook for its stimulus programme.

The ECB is expected to lay the groundwork for an autumn policy shift when it meets, emphasising improved growth while tempering expectations after previously setting off a mini
tantrum in financial markets.

That comes after the Bank of Japan on Thursday kept monetary policy steady and pushed back against the timing for achieving its 2 percent inflation target.

“Investors remained cautious heading into (Thursday’s) ECB meeting, where there are expectations of a more hawkish stance,” ANZ research said in a note.

Spot gold had dropped 0.2 percent to $1,238.30 per ounce at 0341 GMT. U.S. gold futures for August delivery fell 0.3 percent to $1,237.70 per ounce. The euro held near a 14-month high against the dollar on Thursday ahead of the ECB gathering. The dollar index which tracks the greenback against a basket of trade-weighted peers, was flat.

“Overall, a degree of cautiousness is probably warranted in the near-term. But more broadly, a relatively measured move higher with some periods of consolidation should ultimately be healthy for the market,” said Joni Teves, strategist for UBS.

Spot gold may consolidate in a range of $1,236-$1,244 per ounce for one day before rising towards $1,249, as suggested by a Fibonacci projection analysis, said Reuters technical analyst
Wang Tao.

Gold prices will be supported as long as recent weakness in the U.S. dollar persists, said Yuichi Ikemizu, Tokyo branch manager at ICBC Standard Bank.

“I don’t really expect prices to go any lower as I think there is support at the $1,200 an ounce level and people are not so bearish anymore.”

Meanwhile, holdings at the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund fell 0.65 percent to 816.13 tonnes on Wednesday from 821.45 tonnes on Tuesday.

In other precious metals, silver slipped 0.3 percent to $16.19 per ounce, after touching its highest in over two weeks at $16.36.

Platinum declined 0.3 percent to $915.25 per ounce. Palladium also dropped 0.3 percent, to $853.00 per ounce. It hit a three-week high of $872.25 an ounce in the previous session.

Source: Reuters

Comments
Loading...