Gold price sinks in countdown toward ECB’s policy update
New York (Mar 10) Gold retreated for a third straight day as investors await a policy review from the European Central Bank amid speculation that president Mario Draghi may unleash yet more stimulus, potentially buoying the dollar.
Bullion for immediate delivery lost as much as 0.6% to $1 245.69 an ounce and traded at $1 246 at 5:51pm in Melbourne, according to Bloomberg generic pricing. The price dropped 1.1% in the past two days, declining from Monday’s close of $1 267.33, the highest since February 2015.
The yellow metal is still up 17% this year after demand for haven assets surged amid volatility in financial markets. Updates from the ECB on Thursday, and from the Federal Reserve next week, will shed light on the potential for more stimulus and the trajectory of interest rates. At present, investors expect at least a 10 basis-point cut in the ECB’s deposit rate to minus 0.4%, as indicated by swaps on the euro overnight index average.
“We expect that the ECB will step-up its policy accommodation to support the economy in an environment of low inflation,” Australia & New Zealand Banking Group said in a note on Thursday as a gauge of the dollar traded little changed. Gold’s decline “broke support levels established in the last week.”