Gold price down for fourth day, shakes up bullish chart
London (<ar 10) Gold futures fell early Thursday, on track for a fourth straight loss, as traders hunkered down in a defensive posture ahead of what’s widely expected to be additional monetary policy easing from the European Central Bank.
Chart moves have also stirred a bull-bear tussle that could have implications for gold pricing over the medium term.
Gold futures for April delivery GCJ6, -1.32% were down $7.80, or 0.6%, at $1,249.60 an ounce after settling Wednesday at $1,257.40. Gold touched $1,279.60 last week, the highest since Feb. 3, 2015. May silver SIK6, -0.89% was off 7 cents, or 0.5%, to $15.30 an ounce.
U.S. stock futures tipped higher in cautious early trading. U.S.-traded crude CLJ6, +0.26% was near $38.18 a barrel, down 0.3%. London-traded Brent LCOK6, -0.58% slipped but held above $40 a barrel.
Cautiousness was evident across financial markets ahead of the ECB decision. While a modest loosening of already easy monetary policy is widely expected, traders are also well aware that they overestimated what the ECB might deliver at the bank’s December meeting. That miss sparked a quick rebound for the euro that temporarily dented gold.
Economists and traders expect the central bank to cut its deposit rate by 10 basis points, taking it further into negative territory at minus 0.4%. On top of that, the ECB could expand its monthly quantitative easing purchases by as much as 20 billion euros, for a total of €80 billion. It also may also introduce a two-tiered deposit system.
Of course, a deeper-than-expected drop for the euro in response an ECB decision could prove gold-positive in euro terms.
Read: Here’s what a ‘radical’ European Central Bank would do
The euro EURUSD, -1.2911% crisscrossed between gains and losses ahead of the policy decision. In recent trading, one euro bought $1.0983 compared with $1.0999 late Wednesday in New York. The euro traded as low as $1.0955 earlier on Thursday.
New Zealand’s central bank temporarily grabbed the spotlight from the ECB. It surprised markets by cutting interest rates. The move drove New Zealand’s dollar to as low as 66.19 U.S. cents at one point.
Beyond the news, gold traders are keeping close tabs on recent tests of key chart levels.
“The uptrend that has been in place since mid-January is now being broken and the downside pressure is beginning to mount,” said Richard Perry, market analyst with Hantec Markets, in a research note. “I have been concentrating on the momentum indicators for a while now and they have been bearishly diverging.”
Perry said a break of Wednesday’s low at $1,243.50 could open the downside toward $1,224.40. In the other direction, a decisive move above $1,260.60 could put $1,277.80 and $1,279.60 in sight.
Among mining stocks, Randgold Resources GOLD, +0.66% was down 0.4% in premarket action, shaving only a sliver from its some 40% stock gain so far this year. Barrick Gold ABX, +2.70% was down 1.3%. Newmont Mining NEM, +0.97% hasn't registered an early trade but it closed Wednesday trading up about 1% before slipping in after-hours action.
SPDR Gold Trust GLD, -0.83% is down 0.2% at $119.29.
As for other metals, May copper HGK6, +0.02% was steady near $2.23 a pound. April platinum PLJ6, -0.91% lost $2, or 0.2%, to $980.80 an ounce, while June palladium PAM6, -0.39% gained 95 cents, or 0.2%, to $567.10 an ounce.