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Gold steadies as U.S. dollar weakens ahead of ECB decision

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Forex Pros - Gold futures held steady on Thursday, after falling to a three-day low in the previous session, as the U.S. dollar weakened against the euro ahead of a European Central Bank rate announcement later in the day, underpinning demand for the precious metal.

On the Comex division of the New York Mercantile Exchange, gold futures for August delivery traded at USD1,537.35 a troy ounce during late Asian trade, easing down 0.07%.

The gold contract traded between a range of USD1,534.85, the daily low and USD1,539.75, the daily high. Gold prices were nearly 2.5% away from an all-time high of USD1,577.15 an ounce it hit on May 2.

The ECB was not expected to increase its benchmark interest rate later in the day but President Jean-Claude Trichet was widely expected to signal that the bank would raise its minimum bid rate in July.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.3% to trade at 74.09.

Dollar weakness usually benefits gold, as it boosts the metal's appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.

Meanwhile, industry research group GFMS said in a report published Wednesday that gold's longer-term price direction hinges on the direction of U.S. monetary policy and the future of the Federal Reserve's USD600 billion bond-buying program, known as quantitative easing, which is due to end in June.

"The market is at a loss. We need to wait for the verdict on whether there will be further quantitative easing from the Fed to get a clear sense of the future direction," the industry group said.

Gold prices have been moving in a range of USD1,530 to USD1,550 this week. The Fed's next Open Market Committee meeting is scheduled for June 21 and 22.

Elsewhere, silver for July delivery added 0.2% to trade at USD36.88 a troy ounce during late Asian trade, while copper for July delivery slipped 0.3% to trade at USD4.099 a pound.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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