Gold dips as dollar rises vs euro after ECB delays rate rise
[BENGALURU] Gold edged lower on Thursday, holding near a multi-week low as the dollar gained against the euro after the European Central Bank postponed an interest rate hike, but the bank's gloomy economic outlook limited the metal's fall.
Spot gold was down 0.1 per cent at US$1,285.61 per ounce as of 2.00pm EST (7.00pm GMT). It hit US$1,280.70 on Tuesday, the lowest since Jan 25.
US gold futures settled down 0.1 per cent at US$1,286.1 per ounce.
The ECB slashed its 2019 growth and inflation forecasts and lowered those for 2020 and 2021 on Thursday, acknowledging that Europe's slowdown was longer and deeper than earlier thought.
"The good news here for gold is that the interest rate environment globally is unlikely to move much higher," Bart Melek, head of commodity strategies at TD Securities in Toronto, with reference to the ECB statement.
"We do have reason to believe the US dollar will be firm for now and that historically tends to suppress gold prices. But at these levels, gold is still very supported at US$1,275 and US$1,285."
The euro dipped against the dollar following the ECB's monetary policy statement, which was a surprise for many investors. The dollar, measured against a basket of currencies, rose to a near three-month peak as the euro sold off.
Germany, the euro zone's biggest economy, stagnated in the fourth quarter and Italy is in outright recession, raising the risk that a temporary slowdown will become a more lasting downturn as business confidence is sapped by a steady flow of negative news.
The ECB announcement compounded worries of a global slowdown, helping bolster the overall sentiment for bullion, considered a safe store of value during times of economic or political uncertainty.
"Gold is behaving in a relatively lacklustre form. We have got the US jobs data tomorrow which might give us a good indication of what to expect from here," said Ross Norman, chief executive at Sharps Pixley.
The US non-farm payrolls report on Friday could provide further signals on the strength of the economy and how it would affect the Federal Reserve's monetary policy.
Also supporting gold was strong buying from central banks, analysts said, with China, the world's biggest consumer of the metal, increasing its gold reserves to 60.260 million fine troy ounces in February from 59.940 million troy ounces at end-January.
Palladium fell 0.7 per cent to US$1,527.02 per ounce and silver dipped 0.3 per cent to US$15.03. Silver touched a low of US$14.96, its weakest since the end of December.
Platinum was down 1.9 per cent at US$811 per ounce.
REUTERS
KEYWORDS IN THIS ARTICLE
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Energy & Commodities
Seatrium unit to fully redeem S$500 million worth of floating-rate bonds early
Anglo rejects BHP takeover bid as significantly undervalued
India rice prices at three-month low on shrinking demand
Gold prices set for weekly decline ahead of US inflation data
Pricey coffee is here to stay as hoarding, heat hit Vietnam supply
Oil settles higher as weak US economic growth offset by supply concerns