London: Gold prices touched their lowest point in nearly three weeks on Friday as the euro slipped against the dollar following the European Central Bank’s extension of its bond-buying programme.
Currency investors played a diverging monetary policy outlook, with the US expected to raise interest rates again before the end of 2017 while Europe is not now expected to do so in the coming years.
Spot gold touched a low of $1,264.15 (Dh4,639.43) per ounce, its worst since October 6, and although steady at $1,266.19 by 1144 GMT it was still heading for its second weekly decline.
US gold futures for December delivery gave up 0.1 per cent to $1,267.90.
“How gold finishes the week will now be entirely at the whim of the US dollar and US yields, with little to no geopolitical safe-haven premium left in the price,” Jeffrey Halley, a senior market analyst with OANDA, said in a note.
The dollar traded at three month highs against a basket of major currencies, adding pressure on gold as it makes dollar-priced commodities costlier for non-US investors.
“It looks like we are going to be heading a bit lower from here, from both the fundamental and technical points of view,” said INTL FCStone analyst Edward Meir.
Meanwhile, President Donald Trump’s search for the next Fed chair has come down to Fed Governor Jerome Powell and Stanford University economist John Taylor, Politico on Thursday cited one source as saying, while another counselled caution.
“The market is not pricing in more aggressive rate hike from the Fed even given a potential change in leadership next year.
We are likely to see the same rate hike path,” ETF Securities’ Martin Arnold said.
Elsewhere, the US House of Representatives helped pave the way on Thursday for deep tax cuts sought by Trump and Republican leaders, underpinning the greenback.
Holdings of the world’s largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, fell by 1.2 tonnes on Thursday, data from the fund showed, its first outflow in more than two weeks.
Silver prices shed 0.6 per cent to $16.65 per ounce, platinum dipped 0.1 per cent to $916.50, while palladium
slipped 0.3 per cent to $966.
All three metals were on track for weekly declines.