Gold price dips as dollar steadies ahead of ECB meeting
London (Oct 21) Gold eased on Wednesday as the dollar recovered lost ground versus the euro, though uncertainty over the timing of a Federal Reserve interest rate increase kept prices in a narrow range.
The dollar pared earlier losses to trade little changed against Europe's single currency as traders awaited the outcome of a European Central Bank policy meeting on Thursday.
Spot gold was down 0.6 percent at $1,168.76 an ounce at 1347 GMT, off a session high of $1,179.20. U.S. gold futures for December delivery were down $9.60 an ounce at $1,168.10.
Speculation that U.S. interest rates would rise this year helped pressure gold to a 5-1/2-year low in July, but a raft of downbeat U.S. data and concerns over Chinese growth have since fuelled talk that the move may be postponed.
Rising rates tend to weigh on gold, as they lift the opportunity cost of holding non-yielding assets, while supporting the dollar, in which it is priced.
"Higher rates in the United States will support the U.S. dollar versus the euro, so the gold price denominated in dollars will mainly be affected by expectations around the Fed," ABN Amro analyst Georgette Boele said.
With gold now close to its 200-day moving average near $1,175, some expect more gains though trading could be quiet ahead of the ECB meeting on Thursday and Fed meeting next week.
The ECB is unlikely to adjust its 60-billion-euros per month asset purchase programme in October, but investors believe it may hint at more stimulus later this year.
Investors will be closely monitoring U.S. data and comments from Fed officials on monetary policy to gauge when the U.S. central bank may raise rates. The Fed holds two more policy meetings this year, next week and in December.
"Gold is just following U.S. (monetary policy)," Natixis analyst Bernard Dahdah said. "Gold has risen $75 since early September, based on expectations that a rate hike will happen in 2016, not the end of this year."
Among other precious metals, silver was down 1.5 percent at $15.64 an ounce, platinum was down 1.6 percent at $998.74 an ounce and palladium was down 2.7 percent at $672.97 per ounce.
Platinum producer Lonmin plans a $400 million rights issue of new shares and will proceed with a planned restructuring to cut 6,000 jobs in the face of depressed prices, it said on Wednesday.
Source: Reuters
