Gold steadies after eight-day losing streak
London (Mar 12) Gold steadied on Thursday as a retreat in the dollar from 12-year highs arrested its eight-session slide, though speculation that US interest rates could rise sooner rather than later kept prices under pressure.
The dollar extended its decline in early US trading on Thursday after a surprise drop in US retail sales in February.
Spot gold was at $1,153.80 an ounce at 2.54pm GMT, little changed from the previous day, while US gold futures for April delivery were up $1.50 an ounce at $1,152.10.
Earlier spot prices reached a high of $1,166.30 an ounce, but retreated as US stocks climbed at the open.
Gold fell to its lowest since December 1 on Wednesday at $1,147.10 an ounce in an eighth session of losses, its longest drop since March 2009.
That was largely driven by a rally in the dollar to 12-year highs against the euro as the European Central Bank launched a €1 trillion bond-buying campaign, and after robust employment data from the United States last week.
That data supported the view the Fed remains on track to raise US interest rates this year, a move likely to boost the dollar while increasing the opportunity cost of holding non-yielding bullion.
"It’s a foregone conclusion that rates are going to rise, it’s just a question of when, and by how much," Simon Weeks, head of precious metals at the Bank of Nova Scotia, said.
"As such, gold is going to struggle." Euro-denominated gold underperformed to fall 0.9% after reaching a one-month high at €1,103.91 an ounce. A sell-off in the euro paused, with the single currency rising against the dollar for the first time in two weeks.
The euro is down 12% against the dollar this year as monetary policy at the ECB and Federal Reserve diverges, with the ECB launching quantitative easing as the Fed prepares for its first rate rise in almost a decade.
"Future policy action by the Fed remains high on gold’s agenda," BNP Paribas said in a note on Thursday. "It will continue to dictate the pace at which the US dollar appreciates (and official sector demand for gold declines) and accordingly how much downward pressure will be exerted on gold."
Silver was up 0.3% at $15.51 an ounce, spot platinum was flat at $1,116.30 an ounce and spot palladium was also steady at $786.25 an ounce.
Platinum hit its lowest in 5½-years on Wednesday at $1,109.50 an ounce, before recovering.