Gold off 6-month high, eyes turn to ECB
Singapore, September 5, 2012
Gold inched lower on Wednesday, pulling back from a near six-month high in the previous session after weak US data reinforced speculation of imminent stimulus action, as investors await a key meeting of the European Central Bank this week.
US manufacturing activities shrank at their sharpest clip in more than three years last month, feeding hopes the Federal Reserve could act soon to shore up the frail economy.
As the weak data reinforced expectations for another round of quantitative easing by the Fed, the ECB is under increasing pressure to cut excess borrowing costs ahead of a policy setting meeting on Thursday.
Investors may adopt a cautious approach before the meeting, and the all-important U.S. non-farm payrolls data due on Friday, analysts said.
"It is a little too early to go full throttle," said Dominic Schnider, an analyst at UBS Wealth Management in Singapore.
"Will QE really come? Policymakers are heating things up, but will what eventually comes out be as big as the market is looking for?"
Gold's fortune this year has largely been tied to the Fed's attitude towards another round of quantitative easing, which if it materialises, could further boost gold's appeal to investors seeking a hedge against inflation down the road caused by rampant cash printing.
Encouraged by Fed Chairman Ben Bernanke's comment last week on the grave conditions of the U.S. labour market which kept the door wide open for more stimulus measures, spot gold advanced to $1,698.45 on Tuesday, its highest level in nearly six months.
Technical analysis echoed the sentiment. Spot gold has aborted a bullish target at $1,711 an ounce, as the resistance near $1,700 proved strong, said Reuters market analyst Wang Tao.
Spot gold edged down 0.1 percent to $1,692.34 an ounce by 0309 GMT. U.S. gold was little changed at $1,695.10.
A slightly stronger dollar also weighed on gold. – Reuters
More INTERNATIONAL NEWS Stories
- Two Europeans not on board 'missing' Malaysian jet
- China draws red line on North Korea
- Saudi sentences three to death for 2003 bombing
- First bitcoin machine opens in UK
- US sanctions will boomerang, warns Russia
- China plans $50bn bank to fund projects
- Sony to sell Tokyo 'birthplace'
- Obama orders sanctions over Russian moves
- Crimea parliament votes to join Russia
- Arab League to be revamped
- 'Upskirting' is legal: Massachusetts court
- Singapore probes 'unnatural' death of bitcoin trader
- Onus on world powers for Syria war crimes: UN
- US, Russia set for talks on Ukraine crisis
- Brent oil drops below $109
- Services outshine manufacturing, pushing up jobs
- Bitcoin bank shut down after hacker attack
- India to kick off world's biggest poll on April 7
- China signals focus on reforms
- Hundreds ready for bitcoin exchange class action
- Space taxi, Jupiter mission in Obama budget
- Putin: Use of force last resort in Ukraine
- Powers to boost Lebanese military, economy
- Egypt bans Hamas activities in Egypt
- Putin ends army exercise, markets rally
- Russia has violated international law: Obama
- Russian markets hit as Putin tightens grip on Crimea
- Iran nuclear deal 'being implemented as planned'
- Global factory growth stumbles as demand falters
- Obama warns of 'fallout' for Israel if peace effort fails