Prices of Gold futures was trading edged lower on Thursday, as the dollar traded near 5-1/2-year high against a basket of major currencies, but the metal managed to remain above the key $1,200/ounce, ahead of investors awaited the conclusion of meeting of the European Central Bank’s monthly policy and new employment data in the United States.
A stronger US dollar normally weighs on gold, as it absorbs the metal’s appeal as an alternative asset and urges commodities denominated in dollars for holders of other currencies.
On the Comex, gold futures delivery in February dipped $2.80, or 0.23%, to trade at $1,205.90 a troy ounce. Whereas, Spot gold fell 0.4 per cent to $1,204.70 an ounce by 0746 GMT, after rising nearly 1 per cent in the previous session in Singapore.
The investors were awaiting the outcome of the ECB meeting end of the day, after recent soft economic data added to the pressure on politicians to introduce new policy stimuli to boost growth.
It is expected the bank to stop announcing quantitative easing measures, but could extend their of buying assets program.
Meanwhile, market agents looked forward to the launch of the latest US nonfarm payrolls report on Friday, for further indication of the strength of the recovery in the labor market.
” The unemployment figures in the United States announced today, and it is starting to become the pressure on gold prices. Despite the decline Comex gold traded up $1,200. MCX gold was down 0.6 per cent to Rs 26,300.” 100McxTips Analysts said.
Gold rose to a one-month high of $ 1,220.99 an ounce on Monday after falling to $ 1142.91 in the same session.
The expectations of increased rates of loans in the future is considered bearish for gold, as the precious metal endeavors to compete with the assets that support performance when interest rates are rising.
Gold has has also been affected by softer oil prices most recently as the metal is seen as a hedge against inflation fueled by oil.
Some recent movements in gold are seen resulting from short covering, prompting traders must be careful with the highest movements.
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