GN: Gold retreats as dollar strengthens against euro
London: Gold lost further ground yesterday as the dollar strengthened against the euro ahead of an expected rate cut by the European Central Bank, and equities dipped after a weaker-than-expected US jobs report.
Traders are awaiting a spate of interest rate decisions, including that of the ECB today, and key US non-farm payrolls numbers tomorrow to give fresh impetus to the markets.
Weak equity markets
Weakness on the equity markets, which softened after a report showed US private employers slashed a larger than expected 250,000 jobs in November, is feeding through into gold.
Spot gold slipped to $768.80/$770.80 an ounce at 1455 GMT from $781.50 an ounce in New York late on Tuesday.
"As we come towards the year end there is a huge need for dollars to square books, so the dollar will stay bid," said Calyon metals analyst Robin Bhar.
Gold may weaken further if the dollar continues to benefit from risk aversion, he added. "We have seen that although gold may be supported by safe haven fears over further systemic risk, it can be more than outweighed by financial deleveraging," he said.
Gold is often bought as an alternative to the dollar and typically moves in the opposite direction to the US currency.
The currency markets are subdued ahead of rate announcements from the ECB, the Bank of England and the Reserve Bank of New Zealand today. The ECB is expected to cut rates by 50 basis points to 2.75 per cent.
