The price of gold futures has been little changed after falling to a 12-week low yesterday as the dollar appreciated following the ECB’s unexpected cut in interest rates, and ahead of US employment data later today. The precious metal is poised for its third weekly loss in four. On the New York Mercantile Exchange (NYMEX), December gold futures were down 0.09 percent to $1,265.4 a troy ounce as of 12:27 BST, having earlier fallen to as low as $1258 – their weakest since June 10. They have shed 1.7 percent so far this week. Yesterday, the ECB cut all three of its main interest rates by 10 basis points in an attempt to boost economic growth and keep the threat of deflation at bay. “The euro system will purchase a broad portfolio of simple and transparent securities,� said ECB president Mario Draghi at a press conference in Frankfurt am Main after the announcement. Eurozone inflation was at 0.3 percent last month, far below the bank’s two percent target. Draghi revealed that quantitative easing was discussed at yesterday’s meeting. Meanwhile, the Bank of Japan (BoJ) left its record stimulus unchanged, which helped send the yen to an almost six-year low versus the greenback. The ICE U.S. Dollar index was also little changed at 83.77 as of 12:59 BST, having earlier hit 83.94, its strongest since July 10, 2013. It advanced 1.18 percent yesterday, and has climbed almost 1.3 percent so far this week. It has increased five percent since the beginning of July. The dollar index’s 14-day relative-strength index (RSI) has been above the level of 70 since August 19. Some technical analysts interpret a cross above 70 as a sign the underlying instrument had become overbought. A strong dollar renders assets denominated in it, such as gold, more expensive for holders of other currencies to purchase. UBS analysts said in a note today: “Accommodative policy by the ECB - particularly balance sheet expansion - and slower-than-expected Eurozone growth is positive for gold, but weaker EURUSD acts as a counterbalance. Ultimately, it is US monetary policy that matters more for gold, and in our view dollar strength on the back of the widening policy differential between the Fed and the ECB would pose a considerable challenge.� “ECB balance sheet expansion, extended period of low interest rates and concern over a slower-than-expected economic recovery helps gold, but only to a point. A stronger dollar would exert considerable downward pressure on the yellow metal, and persistent positive sentiment towards equities - particularly in the US - would continue to compete with gold for investor funds. At best, current ECB easing offsets some of the downside from Fed policy normalisation. But in our opinion it would have to take more aggressive action from the ECB, which is likely to come alongside a sharp deterioration in Eurozone growth, for gold to benefit significantly. In this scenario, concerns on weaker growth could potentially reactivate physical demand in Europe, should the fear-trade gain traction,� the UBS analysts argued. The US Bureau of Labor Statistics is scheduled to publish its monthly Employment Situation at 13:30 BST today. The data may show US non-farm payrolls climbed more than 200,000 for a seventh consecutive month, according to Bloomberg. A report yesterday showed US services grew at the fastest pace in nine years. "The key U.S. payrolls release is expected to be a strong print which may prompt further selling in gold late in the day in today's session," ANZ analyst Victor Thianpiriya said in a note, as quoted by Reuters.

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