Gold prices, on Thursday, July 20, dropped as investors awaited a meeting of the European Central Bank later in the day for clues on the outlook for its stimulus programme, with a firmer dollar also weighing on the precious metal.
Spot gold fell 0.2 per cent to $1,237.86 per ounce at 0732 GMT. U.S. gold futures for August delivery fell 0.3 per cent to $1,237.80 per ounce.
The ECB is expected to lay the groundwork for an autumn policy shift when it meets, emphasising improved growth while tempering expectations after previously setting off a mini-tantrum in financial markets.
That comes after the Bank of Japan kept monetary policy steady and pushed back against the timing for achieving its 2 per cent inflation target.
“Investors remained cautious heading into (Thursday’s) ECB meeting, where there are expectations of a more hawkish stance,” ANZ research said in a note.
“Overall, a degree of cautiousness is probably warranted in the near-term. But more broadly, a relatively measured move higher with some periods of consolidation should ultimately be healthy for the market,” said Joni Teves, strategist for UBS.
Spot gold may consolidate in a range of $1,236-$1,244 per ounce for one day before rising towards $1,249, as suggested by a Fibonacci projection analysis, said Reuters technical analyst Wang Tao.
Gold prices will be supported as long as recent weakness in the U.S. dollar persists, said Yuichi Ikemizu, Tokyo branch manager at ICBC Standard Bank.
Meanwhile, holdings at the SPDR Gold Trust , the world’s largest gold-backed exchange-traded fund fell 0.65 per cent to 816.13 tonnes on Wednesday from 821.45 tonnes on Tuesday.
In other precious metals, silver slipped 0.3 per cent to $16.20 per ounce, after touching its highest in over two weeks at $16.36 in the previous session.
Platinum declined 0.5 per cent to $913.50 per ounce. Palladium also dropped 0.1 per cent to $855.25 per ounce. It hit a three-week high of $872.25 an ounce in the previous session.
