Sep 10, 2020
Gold at One-Week High as Dollar Remains Weak; ECB Meeting in Focus
Sept 10 (Reuters) - Gold steadied almost at a one-week high on Thursday, as the dollar weakened. Yet the yellow metal traded in a tight $8 range as investors kept away from making huge bets ahead of the European Central Bank's monetary policy decision due later today.
Spot gold was level at $1,945.87 per ounce by 0307 GMT, after hitting its highest since Sept. 3 at $1,950.51 on Wednesday.
U.S. gold futures were consistent at $1,955.50.
"The U.S. dollar is a bit lower, stocks bounced a bit and that essentially carried over to gold as well," said DailyFx currency strategist Ilya Spivak.
Asian financial exchanges on Thursday snapped their longest losing streak since February following a jump on Wall Street, while the dollar list slipped from four-week highs, making gold more affordable for holders of different currencies.
"The ECB meeting is an important piece of event risk. To some extent, gold may be waiting not just for the ECB, but also for the U.S. CPI data and the Federal Reserve next week," Spivak said.
The ECB is all but certain to keep strategy unaltered when it declares its decision at 1145 GMT, which will then be followed by a news conference by its President Christine Lagarde.
The U.S. national bank will follow closely with a two-day meeting set for next week.
Major central banks have turned out unprecedented stimulus measures and kept interest fees low, driving gold to new highs in light of its part as a hedge against inflation and currency degradation.
"Ample money supply, lower interest rates, and macro uncertainty should support gold investment," ANZ analysts said in a note. "Physical demand is recovering, so we see the gold price reaching $2,300/oz next year."
Somewhere else, silver was consistent at $27.02 per ounce, platinum rose 0.4% to $919.24, and palladium gained 1% at $2,295.85.
Economic Calendar Highlights
EUR: Deposit Facility Rate (Sep): 12:45pm
The deposit facility is the rate which banks may use to make overnight deposits with the Eurosystem.
EUR: ECB Marginal Lending Facility: 12:45pm
The rate on the marginal lending facility, which offers overnight credit to banks from the Eurosystem. This is one of the key interest rates for the euro area the Governing Council of the ECB sets.
EUR: ECB Monetary Policy Statement: 12:45pm
European Central Bank Monetary Policy Statement contains the outcome of the ECB's decision on asset purchases and commentary about the economic conditions that influenced their decision.
EUR: ECB Interest Rate Decision (Sep): 12:45pm
The six members of the European Central Bank (ECB) Executive Board and the 16 governors of the euro area central banks vote on where to set the rate. Traders watch interest rate changes closely as short term interest rates are the primary factor in currency valuation.
A higher than expected rate is positive/bullish for the EUR, while a lower than expected rate is negative/bearish for the EUR.
USD: Initial Jobless Claims: 1:30pm
Initial Jobless Claims measures the number of individuals who filed for unemployment insurance for the first time during the past week. This is the earliest U.S. economic data, but the market impact varies from week to week.
A higher than expected reading should be taken as negative/bearish for the USD, while a lower than expected reading should be taken as positive/bullish for the USD.
USD: Producer Price Index (PPI) MoM: 1:30pm
The Producer Price Index (PPI) measures the change in the price of goods sold by manufacturers. It is a leading indicator of consumer price inflation, which accounts for the majority of overall inflation.
A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.
EUR: European Central Bank Press Conference: 1:30pm
The European Central Bank (ECB) press conference is held monthly, about 45 minutes after the Minimum Bid Rate is announced. The conference is approximately an hour long and has two parts. First, a prepared statement is read, then the conference is open to press questions. The press conference examines the factors which affected the ECB's interest rate decision and deals with the overall economic outlook and inflation. Most importantly, it provides clues regarding future monetary policy. High levels of volatility can frequently be observed during the press conference as press questions lead to unscripted answers.
USD: Crude Oil Inventories: 4:00pm
The Energy Information Administration's (EIA) Crude Oil Inventories measures the weekly change in the number of barrels of commercial crude oil held by US firms. The level of inventories influences the price of petroleum products, which can have an impact on inflation.
If the increase in crude inventories is more than expected, it implies weaker demand and is bearish for crude prices. The same can be said if a decline in inventories is less than expected.
If the increase in crude is less than expected, it implies greater demand and is bullish for crude prices. The same can be said if a decline in inventories is more than expected.