Gold steady ahead of ECB policy meeting and US jobs data

Bengaluru — Gold prices steadied on Thursday ahead of a European Central Bank (ECB) policy meeting expected to present a cut in economic growth forecasts, with investors also awaiting US jobs data.

Spot gold was flat at $1,285.94 an ounce at 10.38am GMT, trading close to a more than five-week low hit this week. US gold futures were down 0.1% at $1,286.50.

Global shares were stuck in their worst run of the year and the euro took a breather as investors awaited news from the ECB, which could also signal fresh stimulus for eurozone banks in an effort to stop an unexpected slowdown from becoming a downturn.

“If the euro depreciates in response — for example, because the ECB lowers its projections or changes its interest rate outlook — the gold price is likely to come under pressure,” Commerzbank analysts said in a note. “If so, gold, in euro terms, should then fare somewhat better, however.”

Spot gold prices hit a 10-month peak of $1,346.73 on February 20 but have since lost ground as the dollar revived and US treasury yields rose.

The US non-farm payrolls report on Friday could provide further signals on the strength of the economy and how it would affect the US Federal Reserve’s monetary policy.

Slower US economic growth is not necessarily cause for alarm but a new normal, a top US Federal Reserve official said on Wednesday, underscoring policy makers’ comfort with interest rates at current levels.

Gold is highly sensitive to US interest rates because higher rates increase the opportunity cost of holding non-yielding bullion and boost the dollar.

“Key short-term support for gold comes in at $1,280, while resistance is seen at about $1,300,” said Forex.com analyst Fawad Razaqzada. “If the latter fails to offer resistance we could see the resumption of the bullish trend again.”

Among other precious metals, palladium was up 0.5% at $1,546.04 an ounce and silver gained 0.1% to $15.09. Silver touched a low of $15 for a second day running, representing its weakest since the end of December.

Reuters