Gold dips on stronger dollar ahead of ECB meeting

[BENGALURU] Gold prices slipped on Wednesday as the US dollar rose to multi-week highs ahead of monetary policy strategies from major central banks in North America and Europe.

Spot gold was down 0.3 per cent to US$1,925.20 per ounce by 2.39am GMT. US gold futures fell 0.4 per cent to US$1,935.20.

"Gold is edging lower as the US dollar's strength continues. A deeper correction below US$1,900 cannot be ruled out if the dollar stays strong and gold buyers decide to hold off increasing longs at these levels now," said Jeffrey Halley, a senior market analyst at Oanda.

"Traders in Asia will adopt a cautious tone, preferring to wait for New York to open and clearer evidence as to whether the USD rally and stock market sell-off will continue." The dollar index jumped to a near one-month high against its rivals, making gold more expensive for holders of other currencies.

Offering some respite to gold, a sell-off in technology shares sent Wall Street to its third consecutive session of declines, and a major drugmaker delayed testing of a Covid-19 vaccine.

Investors' focus now shifts to the European Central Bank policy meeting due on Thursday. While no major policy moves are expected since it has acted aggressively to shore up the virus-hit economy, investors will watch out for its inflation forecasts.

Gold is used as a hedge against inflation and currency debasement.

Market players also awaited the policy meeting of the Bank of Canada on Wednesday, while the US Federal Reserve's next meeting is scheduled for next week.

Elsewhere, platinum was down 0.4 per cent to US$897.94 per ounce. On Tuesday, the World Platinum Investment Council changed its forecast for the market in 2020 from a surplus to a deficit.

Silver dropped 0.8 per cent to US$26.48 per ounce, while palladium was flat at US$2,274.63.

REUTERS