FX:Gold futures ease off 6-month high ahead of ECB
Forexpros - Gold futures inched lower during European morning trade on Wednesday, easing off the highest level since mid-March as investors turned cautious ahead of the European Central Bank’s policy meeting on Thursday and Friday’s crucial U.S. non-farm payrolls data.
On the Comex division of the New York Mercantile Exchange, gold futures for October delivery traded at USD1,692.05 a troy ounce during European morning trade, easing down 0.1%.
Prices were stuck in a narrow trading range of USD1,690.25 a troy ounce, the daily low and a session high of USD1,693.55 a troy ounce. Gold futures rallied to USD1,698.75 a troy ounce on Tuesday, the highest since March 13.
Gold futures were likely to find support at USD1,644.45 a troy ounce, the low from August 31 and near-term resistance at USD1,706.15, the high from March 13.
Investors were jittery ahead of the ECB’s policy meeting on Thursday, at which President Mario Draghi was expected to announce details of measures to help stabilize the region’s sovereign debt markets.
ECB President Mario Draghi told European lawmakers on Monday that purchases of short-term sovereign bonds to help debt-burdened countries like Spain and Italy would not breach European Union rules.
Market sentiment remained vulnerable however, amid growing fears that the central bank may disappoint.
Meanwhile, gold traders also looked ahead to Friday’s crucial U.S. non-farm payrolls data, which will allow investors to gauge the strength of the labor market and the need for additional easing by the Federal Reserve.
A disappointing jobs report could influence the Fed’s decision at its next policy meeting starting on September 12.
Speculation the Federal Reserve was moving closer to introducing fresh measures to stimulate growth in the U.S. economy mounted on Tuesday after data showed that manufacturing activity in the U.S. contracted for the third consecutive month in August.
Fed Chairman Ben Bernanke indicated last week that the central bank will act as needed to strengthen the U.S. economic recovery.
Moves in the gold price this year have largely tracked shifting expectations as to whether the U.S. central bank would pump more money into the financial system.
Gold gained as much as 15% earlier this year to hit USD1,790 an ounce after the Fed said in January it would keep interest rates near zero until at least late 2014 and indicated that it could introduce a fresh round of asset-purchases.
However, prices have lost almost 5% since late February, as the Fed failed to deliver more easing and amid concerns over the euro zone’s deepening debt crisis, which has fueled demand for the precious metal's hedge, the greenback.
Elsewhere on the Comex, silver for December delivery fell 0.7% to trade at USD32.17 a troy ounce, while copper for December delivery shed 0.3% to trade at USD3.459 a pound.
