MW: Gold struggles for direction ahead of data, ECB meeting
Gold futures were switching between modest gains and losses in early Thursday trade as metals investors awaited U.S. economic reports on employment and guidance from European Central Bank President Mario Draghi.
The yellow metal was little changed after the ECB left rates unchanged as expected, but a news conference with ECB’s Draghi to discuss Europe’s economic health and the prospect of more stimulus measures might offer some guidance for metals traders. Draghi’s news conference is slated to begin at 8:30 a.m. Eastern Time.
The European central banker’s remarks could influence the value of the euro, which may in turn provide a jolt for the U.S. dollar. A stronger greenback can be a headwind for dollar-denominated commodities, making them more expensive to buyers using other currency units.
Meanwhile, a U.S. jobless claims report is scheduled for release around 8:30 a.m. Eastern.
December gold GCZ5, -0.12% was 30 cents, or less than 0.1%, higher at $1,167.50 an ounce, but has been flipping up and down, after the precious commodity saw its lowest settlement price since mid October on Wednesday.
“Gold being a buck-denominated commodity, it is likely to move closely with the [euro/dollar] currency pair today. So, there’s the potential for a sharp drop in the price of gold if Draghi says what many equity market bulls hope. Conversely, a disappointment should give gold a temporary boost as investors probably exit their long equity positions in favor of the euro and safe-haven assets such as gold,” Fawad Razaqzada, analyst at Forex.com, told MarketWatch.
Talk of expanding economic stimulus measures by Draghi, which some hope for, could deliver a boost to the dollar, weakening the euro and weighing on gold.
Read: Euro’s fate hinges on Draghi’s words
Market participants were also digesting a bearish research note from Goldman Sachs Group GS, -0.07% which predicted that gold prices might slip to $1,000 an ounce in the next 12 months, pressured by the Federal Reserve’s plans to raise interest rates from ultralow levels. Higher rates diminish the appeal of gold, which doesn’t offer interest and has prospered in what has been a low interest-rate environment.
In other metals, December silver picked up 5 cents, or 0.4%, to trade at $15.77 an ounce, while December high-grade cooper HGZ5, +1.48% gained 4 cents, or 1.5%, to trade at $2.398 a pound.
