Gold flat ahead of ECB meeting, US data

London (Mar 5)  Gold steadied at about $1,200 an ounce on Thursday after a three-day losing streak, as investors remained cautious ahead of a European Central Bank (ECB) meeting set to give details on its bond-buying programme and the release of key US economic data.

The ECB is expected to detail the €1-trillion quantitative easing (QE) scheme following its policy meeting.

US non-farm payrolls numbers are due on Friday and will be scanned for any clues on how they could impact the timing of the US Federal Reserve’s move to hike interest rates.

Higher rates could hurt demand for non-interest-bearing assets such as gold.

"At some point gold is going to have to shrug off the interest hike theme, but we still think though that there are always people that won’t believe it until it happens," Macquarie analyst Matthew Turner said.

"And those people of course have got history on their side because there hasn’t been a rate hike for eight years and every year there has been a forecast of one and it hasn’t happened yet," he added.

"And in that sense the non-farm payrolls should be quite important."

Spot gold was up 0.1% to $1,200.65/oz by 10.39am GMT, after losing 1% in the last three sessions on a firm dollar and robust US economic data.

The next support for gold currently comes in at $1,195, said technical analysts at ScotiaMocatta.

"We expect a further test of this level, and should we see it break, it would be bearish for gold and open a test of the $1,131-low (reached in November 2014)," they said.

The dollar rose to an 11-and-a-half-year peak versus a basket of leading currencies, while European shares rose.

A stronger dollar makes gold more expensive for holders of other currencies, while a robust economy decreases the appeal of bullion, often seen as an alternative investment during times of economic and geopolitical uncertainty.

Traders said robust US economic data and expectations of an interest rate hike in coming months will continue to weigh on investor sentiment in the short term.

SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, saw its holdings drop to a one-month low of 760.80-tonnes earlier this week, having posted a near 8-tonne fall, its biggest one-day outflow for the year so far.

Spot silver fell 0.1% to $16.16/oz, while palladium was up 0.1% at $828.50/oz and platinum was unchanged at $1,180.45/oz.