Gold drops on dollar gains
Gold fell for a second day as the dollar gained before a European Central Bank meeting this week.
|||Singapore - Gold fell for a second day as the dollar gained before a European Central Bank meeting this week at which policy makers may deepen the region’s negative interest rate policy, benefiting the US currency.
Bullion for immediate delivery declined as much as 0.8 percent to $1 251.70 an ounce and traded at $1 258.70 at 3:55 p.m. in Singapore, according to Bloomberg generic pricing. The price, which fell 0.5 percent on Tuesday, is headed for the first back-to-back loss since February 22.
The metal still is up 19 percent this year as demand for haven assets surged amid volatility in financial markets. Investors are awaiting a review from the ECB on Thursday, with meetings of the Bank of Japan and US Federal Reserve due next week. Analysts predict ECB president Mario Draghi is preparing to cut the euro zone’s already negative deposit rate and expand its quantitative-easing program in a bid to boost growth.
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Gold is correcting after a “really strong rally over the last few weeks,” and as the dollar rose, David Lennox, an analyst at Fat Prophets in Sydney, said by phone. A gauge of the greenback climbed for a second day, making the metal more expensive for holders of other currencies.
Holdings in exchange-traded funds rose for an 18th straight trading day on Monday, the most since May 2010, expanding 1.3 metric tons to 1 725.1 tons, according to data compiled by Bloomberg. That’s the highest in 18 months.
“The strong gains that we’ve seen over the past few weeks could represent an opportunity to lock in those,” Daniel Hynes, senior commodity strategist at Australia & New Zealand Banking Group, said in a Bloomberg Television interview.
“But over the medium term, the outlook for gold looks relatively positive. We certainly feel those longer-term dynamics which will be matched by a pick up in physical flows will really support gold at these levels.”
Silver was little changed at $15.3526 an ounce, palladium lost 0.3 percent to $557.55 and platinum declined 0.3 percent to $980.00
--With assistance from Yvonne Man.
BLOOMBERG