Gold edged lower overnight, holding near a multi-week low as the US dollar gained against the euro after the European Central Bank postponed an interest rate hike, but the bank’s gloomy economic outlook limited the metal’s fall.
Spot gold was down 0.1 per cent at $US1,285.61 per ounce.
It hit $US1,280.70 on Tuesday, the lowest since January 25.
US gold futures settled down 0.1 per cent at $US1,286.1 per ounce.
The ECB slashed its 2019 growth and inflation forecasts and lowered those for 2020 and 2021 on Thursday, acknowledging that Europe’s slowdown was longer and deeper than earlier thought.
‘The good news here for gold is that the interest rate environment globally is unlikely to move much higher,’ said Bart Melek, head of commodity strategies at TD Securities in Toronto, with reference to the ECB statement.
‘We do have reason to believe the US dollar will be firm for now and that historically tends to suppress gold prices. But at these levels, gold is still very supported at $US1,275 and $US1,285.’
The euro dipped against the US dollar following the ECB’s monetary policy statement, which was a surprise for many investors.
The US dollar, measured against a basket of currencies, rose to a near three-month peak as the euro sold off.
Germany, the euro zone’s biggest economy, stagnated in the fourth quarter and Italy is in outright recession, raising the risk that a temporary slowdown will become a more lasting downturn as business confidence is sapped by a steady flow of negative news.
The ECB announcement compounded worries of a global slowdown, helping bolster the overall sentiment for bullion, considered a safe store of value during times of economic or political uncertainty.
‘Gold is behaving in a relatively lacklustre form. We have got the US jobs data tomorrow which might give us a good indication of what to expect from here,’ said Ross Norman, chief executive at Sharps Pixley.
The US non-farm payrolls report on Friday could provide further signals on the strength of the economy and how it would affect the Federal Reserve’s monetary policy.
Also supporting gold was strong buying from central banks, analysts said, with China, the world’s biggest consumer of the metal, increasing its gold reserves to 60.260 million fine troy ounces in February from 59.940 million troy ounces at end-January.
Palladium fell 0.7 per cent to $US1,527.02 per ounce and silver dipped 0.3 per cent to $US15.03.
Silver touched a low of $US14.96, its weakest since the end of December.
Platinum was down 1.9 per cent at $US811 per ounce.