LONDON: Gold edged higher yesterday as the dollar retreated but stayed under pressure from talk the European Central Bank may loosen monetary policy and speculation the Federal Reserve may scale back US stimulus later this year.
The euro earlier hit a six-week low as investors sold the single currency on mounting speculation that the ECB may loosen policy in the near term, though it recovered after business surveys showed euro zone manufacturing accelerated in October.
That helped push the dollar down 0.2 percent against a basket of currencies, though it was underpinned by upbeat US manufacturing data that supported a view the Fed might scale back its bond-buying in December, rather than March as many in the market have been expecting.
“The (US) central bank is keeping markets guessing. Now December is back on the agenda,” Societe Generale analyst Robin Bhar said. “I think it’s unlikely, but the Fed statement and thinking suggests they haven’t completely ruled that one out. That’s really impacting the market, as well as the turnaround in the euro/dollar.”
“The ECB meets this week, and they may well set the path for cutting rates in December,” he said. “Those two factors have really capped gold and have put it into a bit of a bearish phase.”
Spot gold was up 0.1 percent at $1,316.19 an ounce at 1215 GMT, after falling nearly three percent last week to their lowest in two weeks at $1,305.69. US gold futures for December delivery were up $3.10 an ounce at $1,316.30.
Gold prices are down more than 20 percent this year, largely on the back of expectations that the Fed is set to scale back monetary stimulus.
Reuters
