Gold inches higher as euro strengthens against dollar

Bengaluru — Gold prices inched up on Thursday as the euro rose to two-week highs against the dollar, with investors waiting for meetings of key central banks and the US-North Korea summit all due next week.

Spot gold was up 0.1% at $1,296.98/oz by 3.59am GMT, while US gold futures for August delivery were largely unchanged at $1,301.20/oz.

The dollar index, which measures the greenback against a basket of six major currencies, fell 0.1% to 93.538. The euro climbed to two-week highs against many of its rivals on Thursday, on rising bets the European Central Bank (ECB) may announce it will wind down its stimulus programme by year-end as early as next week.

“A strong euro means a weaker dollar, so that’s definitely the reason that gold is firm,” said Yuichi Ikemizu, Tokyo branch manager at CIBC Standard Bank.

“The market is pretty quiet, there is no big factor to make the market move at the moment,” Ikemizu said, adding that investors were waiting for events next week.

A Federal Reserve policy meeting and US-North Korea summit are both due next week, while a Group of Seven (G-7) summit begins this Friday in Quebec. The expectation of higher interest rates and a surge in equities have capped gains in non-interest-paying bullion, which is priced in dollars.

Asian shares rose to two-and-a-half-month high on Thursday, supported by strong economic fundamentals. “Despite the very tight trading ranges, we remain cautiously optimistic on gold and see it moving higher over the course of June, although not substantial amounts,” INTL FCStone analyst Edward Meir said in a note.

“For now, it seems to be a ‘watch and wait’ game for a little while longer, as speculative money has clearly moved on to more exciting markets.”

Outflows of North American gold-backed exchange traded funds (ETFs) rose in May, as volatility in the gold market dragged prices lower, the World Gold Council said on Wednesday.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.42% to 832.59 tonnes on Wednesday, the lowest in more than three-months.

Meanwhile, silver rose 0.1% to $16.65/oz.

Platinum fell 0.3% to $900.20/oz, while palladium was 0.1% higher at $1,017.20.

Reuters