Gold dips as ECB knocks euro, equities recover lost ground | Reuters

Gold dips as ECB knocks euro, equities recover lost ground
| Reuters

LONDON Gold fell on Thursday after posting its biggest one-day gain in two weeks the day before, as hints of further stimulus from the European Central Bank hurt the euro and a rebound in European equities curbed risk aversion.

Turmoil in financial markets and concerns over China and other emerging markets will prompt a March review of the ECB's monetary policy, President Mario Draghi said after a meeting, holding out the prospect of further loosening.

The euro fell 0.6 percent against the dollar after the bank held rates at record lows and Draghi's comments boosted prospects of continued stimulus. European stocks also extended gains, climbing 1.5 percent.

Spot gold was down 0.4 percent at $1,096.10 an ounce at 1434 GMT, while U.S. gold futures for February delivery were down $9.90 an ounce at $1,096.30.

"Draghi's dovish remarks seems to have improved risk sentiment somewhat -- the yen is lower and gold also a touch lower," ABN Amro analyst Georgette Boele said. "The market was cautious ahead of the meeting and he sounds dovish. That is negative for the euro."

Gold hit two-month highs earlier this week as investors sought alternative assets after stocks and industrial commodities, especially oil, fell on fears of a global slowdown.

It has repeatedly struggled to maintain a push above $1,100 an ounce as the threat of further U.S. interest rate increases and a stronger dollar suggest scope for gains is limited. It has also hit resistance at its 100-day moving average at $1,107.

Also feeding into better sentiment on Thursday, oil prices edged off early lows after falling to their weakest since 2003 this week on persistent concerns about a supply overhang.

"You're not seeing so much safe haven bidding, although that is probably supporting the market," Societe Generale analyst Robin Bhar said.

"As the price inches higher, you're just losing steam from the physical markets. The physical buying is maybe not there to mop up any excesses, and for the moment gold appears to be struggling."

Physical gold demand in Asia slowed this week as prices rose, curbing seasonal buying in China ahead of a big holiday and forcing sellers in India to offer a discount.

Among other precious metals, platinum was down 0.9 percent at $810.74 an ounce, after earlier falling to a 7-year low at $807.89. Palladium was up 0.6 percent at $495.40 an ounce and silver was down 1.5 percent at $13.94.

(Additional reporting by Manolo Serapio Jr. in Manila, editing by Katharine Houreld and David Evans)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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Updated Date: Jan 22, 2016 01:15:11 IST

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