Gold dips as market awaits European Central Bank decision

Bengaluru — Gold prices edged lower on Thursday as cautious investors awaited a policy decision by the European Central Bank due later in the day, though mounting concerns over a virus outbreak in China provided a floor under prices.

Spot gold was down 0.1% at $1,557.91/oz by 3.42am GMT. US gold futures were unchanged at $1,556.80.

With more than 500 confirmed cases and 17 deaths in China from the new coronavirus, the World Health Organisation (WHO) will decide on Thursday whether to declare a global emergency over the outbreak.

“It looks like the market doesn’t really have the impetus it needs to go one way or another. Even the coronavirus outbreak did not give gold a meaningful run,” said Ilya Spivak, a senior currency strategist at DailyFx.

However, “if there is an (WHO emergency) announcement, the markets might conclude or be concerned that we might have a SARS-like response, where there is significant economic impact and gold might go up on that,” he said.

The severe acute respiratory syndrome (SARS) epidemic in 2002-2003, also a coronavirus outbreak, had started in China and killed nearly 800 people worldwide and hit the global economy.

Traders remained anxious about the spread of the virus as China gears up to celebrate the Lunar New Year from this weekend, a peak period for travel and gold demand in the region.

Under investors’ radar is a monetary policy meeting by the European Central Bank (ECB), where ECB president Christine Lagarde is also set to launch a broad review of its policy that is likely to see her redefine the central bank’s main goal and how to achieve it.

“Lower interest rates and accommodative monetary policy are the reality, and this favours investment demand for gold … though the sector remains vulnerable to brief pullbacks, as investors lock in profits,” ANZ analysts said in a note.

Spot gold is biased to revisit its January 21 low of $1,545.96/oz, as it looks shaky around a resistance at $1,564, said Reuters technical analyst Wang Tao.

Among other precious metals, palladium advanced 1.6% to $2,511.90/oz, silver fell 0.2% to $17.77/oz, while platinum shed 0.2% to $1,009.94.

Reuters