Gold steadies amid hope that central banks will take more dovish stance

Bengaluru — Gold prices steadied on Friday after touching a one-week low in the previous session, buoyed by expectations of monetary policy easing from leading central banks, while investors awaited US economic growth data due later in the day.

Spot gold was up 0.1% at $1,416.16/oz, as of 4.15am GMT, after falling to a one-week low of $1,410.77 in the previous session.

The metal lost 0.6% so far this week, putting it on track for its first weekly decline in three.

US gold futures were up 0.1% at $1,416.40.

“Positive view on gold is driven by expectations of broad monetary easing by key central banks globally, including the Federal Reserve and the European Central Bank [ECB],” said Heng Koon How, head of markets strategy at Singapore’s United Overseas Bank.

Market participants are now looking forward to the US central bank’s July 30-31 monetary policy meeting, where it is expected to trim its interest rate by at least 25 basis points.

However, the ECB left interest rates unchanged at its meeting on Thursday, but its president Mario Draghi signalled that the bank was prepared to cut rates in September.

“The ECB is sort of delaying the dovish stance to get the Fed out of the way, they did not want the Fed to steal their thunder,” said Stephen Innes, managing partner at Vanguard Markets.

“Weaker longs in the market will be worried and they would better be sellers going into the FOMC [Federal Open Market Committee] meeting, because the market has priced in too dovish of a lead, and the Fed might disappoint making reference back to the ECB,” he said.

Meanwhile, the dollar index was holding near a two-month high hit in the previous session, making gold expensive for holders of other currencies.

US GDP data, which is due on Friday, is expected to show that US economic growth slowed to 1.8% in the second quarter from 3.1% in the previous quarter.

Source: businesslive.co.za