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Gold prices inched lower on Thursday as investors awaited a meeting of the European Central Bank later in the day for clues on the outlook for its stimulus programme, with a firmer dollar also weighing on the precious metal.
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 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 fell 0.2 percent to $1,237.86 per ounce at 0732 GMT.
U.S. gold futures for August delivery fell 0.3 percent to $1,237.80 per ounce.
The euro held near a 14-month high against the dollar on Thursday as investors look to hints from the ECB on tapering of its stimulus.
The dollar index was up 0.12 percent at 94.889 against a basket of currencies, but was not far from multi-month lows hit earlier this week on a fading outlook for a hike in U.S. interest rates.
“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 $16.20 per ounce, after touching its highest in over two weeks at $16.36 in the previous session.
Platinum declined 0.5 percent to $913.50 per ounce.
Palladium also dropped 0.1 percent to $855.25 per ounce. It hit a three-week high of $872.25 an ounce in the previous session.
Source: Reuters
