Gold pared losses with the euro rebounding against the dollar after the European Central Bank chief, Mario Draghi said that the bank would reevaluate the case for more stimulus in 2015.
The strength in the US dollar makes the metal, which is dollar-denominated, more expensive for holders if other currencies.
Investors have been looking for a clear sign from Draghi that the ECB was heading for a move into the sort of outright printing of money or quantitative easing carried out by other central banks in recent times.
According to Reuters, spot gold stood at $1,204.80 per ounce, dropping 0.4% off an earlier low of $1,201.07. December delivery US gold futures dropped $2.80 at $1,205.90. The euro bounced from the 28-month low to climb 0.3%.
The uncertainty ahead of Friday’s key reading of the US non-farm payrolls and caution after swings in prices of gold on Monday limited gains and kept the prices from building gainers as reported by traders.
Afshin Nabavi, head of trading at MKS said, “The market is extremely nervous. A lack of direction is keeping everyone on their toes with Monday still very fresh in everyone’s minds. Gold is just following the euro tick by tick.”
Bob Haberkorn, senior commodities broker at RJO Future was quoted by The Wall Street Journal as having said, “Gold is going to keep moving lower after the announcement as people look forward to tomorrow’s jobs data.”
Mr. Haberkorn said that most investors were betting that the ECB chief would be aggressively dovish on monetary policy and sought the safety of gold as a hedge ahead of the decision. The disappointment has put pressure on prices of gold.
Spot silver rose 0.9% at $16.54 per ounce. Spot platinum rose 1.6% at $1,237.20 per ounce and spot palladium climbed 0.4% to $797.50 per ounce.
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