Gold rebounds as stocks retreat after Kuroda’s stimulus comments

Tokyo: Gold rebounded from a three-week low after Bank of Japan Governor Haruhiko Kuroda’s dismissed the use of so-called helicopter money as stimulus, pushing stocks lower and spurring demand for a haven.

There is no need and no possibility for helicopter money in Japan, Kuroda said in a BBC Radio 4 programme broadcast on Thursday. Bullion rose as much as 0.6 per cent after the comments and European equities retreated from a four-week high.

Gold’s recent performance has been tied to stocks, with the metal moving in the opposite direction to the Stoxx Europe 600 Index in the previous eight days. Almost $5 trillion had been added to the value of global equities since June 27 amid signs central banks including the BOJ will do more to shore up economies after the UK voted to leave the European Union.

“The gold market is being driven by the direction of stock prices at the moment,” Adrian Ash, head of research at online trading and vaulting service BullionVault, said by phone from London. “When equities are riding as high as they have been, there’s very little interest in gold and vice versa.”

Gold Price

Bullion for immediate delivery climbed 0.5 per cent to $1,322.38 an ounce by 11:22am in London, according to Bloomberg generic pricing. Prices reached the lowest since June 29 earlier today and have dropped about 4 per cent since touching a two-year high last week.

Kuroda’s remarks come before the European Central Bank’s meeting later today, at which policymakers are expected to leave rates unchanged and signal further easing for later in the year.