Gold Edges Lower but Holds Above $1,100 as Dollar Soars on Draghi Remarks

Gold Edges Lower but Holds Above $1,100 as Dollar Soars on Draghi Remarks

Gold futures prices edged lower in Europe trade on Thursday, as the dollar surged against the euro after European Central Bank President Mario Draghi signed more easing was possible in the coming months amid ongoing concerns over the oil rout.

Gold for February delivery on the Comex Exchange dropped $10.00, or 0.9%, to trade at $1,096.20 a troy ounce.

The EUR fell nearly 1% against the US dollar while the US dollar index, which measures the greenback strength against a basket of major currencies, rose 0.65% to 99.81, the highest since Dec. 3.

The president of the European Central Bank, Mario Draghi, said he expects rates at current or lower levels for a prolonged period of time. He added that downside risks have increased and that the central bank might reconsider its policy stance at its next meeting in March.

Early on the day, the ECB kept its the benchmark interest rate at the record-low of 0.05%, in line with market expectations. The central bank continued to take deposit facility rate unchanged at -0.30% and left its marginal lending rate at 0.30%.

Investors kept an eye on US data for later in the session to assess whether the world’s largest economy is sufficiently strong to withstand further rate hikes in 2016. The US is is to release data on activity manufacturing in the Philadelphia region and the weekly report on initial jobless claims at 8:30 am ET.

A recent batch of disappointing economic data underscored concerns that growth stagnated in the fourth quarter, which could persuade the Federal Reserve to delay its next rate hike until the second half of this year. A gradual path to higher rates is seen as less of a threat for gold prices to a rapid series of increases.

Gold has increased the pressure. The upper levels are seeing selling pressure in gold. MCX gold declined by about 1 per cent is trading at Rs 26325.

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