Gold is completely flat this morning as traders are sidelined ahead of the ECB rate and policy decision due later today. Gold has been weak and is expected to continue to its downtrend as the US recovers and the Federal Reserve is expected continue to taper its monetary purchases or possibly accelerate its reduction plans. Gold held near a four-month low as investors awaited a European Central Bank monetary policy decision and U.S. economic data that may support further reductions to the Federal Reserve’s asset purchases. Gold slipped 3.3 percent in May, the biggest monthly drop this year, as the euro weakened 1.7 percent versus the dollar on speculation that the ECB will add stimulus when policy makers meet today. Data tomorrow may show the U.S. added more than 200,000 jobs for a fourth month, after a report yesterday that said service industries grew at the fastest pace in nine months in May. Gold is trading at 1244.30.
Swiss based MKS said that physically backed gold exchange-traded funds continue to linger towards yearly lows, but have seen slight inflows with the recent weakness in price. SPDR Gold Trust (ARCA:GLD), which is the world’s largest gold-backed ETF, saw its holdings rise 1.8 metric tons to 787.08 tons on Tuesday, although holdings for the entire ETF space dropped a little over 3 tons.
An ECB move to cut rates could theoretically support gold as a monetary easing measure, technical momentum and a stronger dollar could have a much bigger impact on prices. The euro languished at four-month lows early on Thursday, while the US Dollar Index held near a four-month peak hit earlier in the week.
Markets were also eyeing Friday’s U.S. nonfarm payrolls to gauge the strength of the economy. A weak report could burnish gold’s safe-haven appeal. In news on other precious metals, South Africa’s new mining minister Ngoako Ramatlhodi said he hoped to resolve the strike in the platinum sector this week, and union AMCU was also optimistic the five-month stoppage that has crippled mine output could be nearing an end. Platinum and palladium eased as an end to the strike would ease worries over tight supply. Platinum is trading at 1430.85, down $9 in this morning’s session while palladium is down $2.80 at 834.40.
Copper is flat after sliding on Wednesday and is trading at 3.095. Market analysts said the fall in copper prices at futures trade was due to offloading of positions by speculators, taking weak cues from global market on signs of slowing Chinese demand and amid reports of a probe into metals warehousing at the country’s Qingdao port. Copper premiums in Shanghai fell after traders cited concerns related to a probe into the use of the metal as collateral in financing. According to traders and warehousing sources, the port authorities at Qingdao’s Dagang wharfs were examining last week whether there had been multiple issuing of receipts for single cargoes of metal tied to a trading company and linked companies.