Gold prices ease as euro weakens ahead of ECB meeting

Chicago (Nov 5)  Gold prices eased on Tuesday, pressured by a retreat in the euro ahead of a key European Central Bank meeting later this week, and as investors awaited more transparency on U.S. monetary policy.

The euro fell against the dollar on Tuesday on speculation the ECB may signal easier monetary policy or even cut rates at a meeting on Thursday after a sharp moderation in headline euro zone flash inflation figures last week.

A stronger dollar tends to weigh on gold, which is denominated in the U.S. unit.

Spot gold was down 0.2 percent at $1,312 an ounce, while U.S. gold futures for December delivery were down $3.20 an ounce at $1,311.

"We've seen recently that the dollar has been strengthening because the euro is weakening," Natixis analyst Bernard Dahdah said. "The euro's appreciated by some 2 percent, and at the same time the gold price has dropped by almost 3 percent."

"Looking forward, it will be interesting to see what the ECB has to say, and whether they will continue with quantitative easing," he said. "We just have to wait and see."

Investors are also awaiting U.S. non-farm payrolls data on Friday for clues on when the Federal Reserve will taper its quantitative easing programme, a major driver of higher gold prices during the financial crisis.
Speculation that the scheme was about to end has pushed gold prices down 20 percent this year, and is persisting despite a senior central banker saying on Monday that the Fed should scale back asset purchases only when the U.S. economy shows clearer signs of improvement.