Gold inches higher as focus turns towards the ECB

Gold prices edged higher on Wednesday, snapping a four-day losing streak on technical buying, while investors awaited European Central Bank’s (ECB) meeting where it is widely expected to cut interest rates.

Spot gold was up 0.3% at $1,490.09/oz, as of 4.14am GMT. In the previous session, prices fell to their lowest since August 13 at $1,483.90. US gold futures were little changed at $1,498.8/oz.

“The ECB is expected to reduce further the interest rate into negative territory ... The meeting could serve as a potential catalyst [for gold] and investors are already buying into the rate cut expectations,” said Margaret Yang Yan, a market analyst at CMC Markets.

Given that gold has had such a deep correction from its recent peak, investors are buying on dips, Yan added.

Bullion prices have shed more than 4%, or over $60, in less than a week, mainly hurt by a broad uptick in risk appetite.

ECB policymakers are leaning towards a package that includes a rate cut, a pledge to keep rates low for longer and compensation for banks over the side-effects of negative rates, five sources familiar with the discussion said last week.

 

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