Gold Price Trades Near-Flat

London (Oct 22)  Gold traded nearly flat on the London spot market on Thursday as a lack of price signals left investors struggling to find a direction for the precious metal.

Spot gold was down 0.03% at $1,166.80 a troy ounce in morning European trade, after closing lower on Wednesday as investors locked in profits from last week’s rally.

Carsten Menke, a commodities research analyst at Julius Baer, said gold is facing a lack of new signals to trade on and even ignored a slight fall in the value of the dollar on Thursday.

The WSJ Dollar Index, which measures the dollar against a basket of other currencies, was down 0.03% on Thursday. When the dollar weakens, the precious metal becomes more affordable for investors who hold other currencies.

A move lower on Wednesday would extend this week’s losses after prices reached nearly four-month highs last week on the belief that the Federal Reserve won’t raise interest rates this year.

Some analysts said gold is following other commodity prices lower this week. “The gold rally is petering out amid speculation of lower commodity prices keeping inflation low,” ANZ said in a report. Gold is typically seen as a hedge against inflation.

Meanwhile, investors will be looking for new signals on monetary policy in Europe in coming days. On Thursday, a meeting of the European Central Bank could provide further clues on whether more stimulus is to come, according to  Commerzbank.

Commerzbank said it believes the ECB will adopt a “wait and see attitude” over further bond buying.

Meanwhile, numbers on U.S. housing prices, due out later Thursday, could also provide a signal on the health of the U.S. economy and the direction of U.S. rates and the dollar.

Gold is more competitive with other asset classes when interests are pinned near zero, so a longer delay to rate increases could be supportive for gold prices.

Precious metals were mixed on Thursday morning. Spot silver was up 0.25% at $15.75 an ounce, spot platinum was down 0.58% at $1,001.30 an ounce and spot palladium was down 0.55% at $673.40 an ounce.

Source: WSJ