Gold prices steadied on Thursday ahead of a European Central Bank (ECB) policy meeting expected to present a cut in economic growth forecasts, with investors also awaiting U.S. jobs data.
Spot gold was flat at $1,285.94 an ounce at 1038 GMT, trading close to a more than five-week low hit this week.
U.S. gold futures were down 0.1 percent at $1,286.50.
Global shares were stuck in their worst run of the year and the euro took a breather as investors awaited news from the ECB, which could also signal fresh stimulus for euro zone banks in an effort to stop an unexpected slowdown from becoming a downturn.
“If the euro depreciates in response – for example, because the ECB lowers its projections or changes its interest rate outlook – the gold price is likely to come under pressure,” Commerzbank analysts said in a note.
“If so, gold in euro terms should then fare somewhat better, however.”
Spot gold prices hit a 10-month peak of $1,346.73 on Feb. 20 but have since lost ground as the dollar revived and U.S. Treasury yields rose.
The U.S. non-farm payrolls report on Friday could provide further signals on the strength of the economy and how it would affect the Federal Reserve’s monetary policy.
Slower U.S. economic growth is not necessarily cause for alarm but a new normal, a top Federal Reserve official said on Wednesday, underscoring policymakers’ comfort with interest rates at current levels.
Gold is highly sensitive to U.S. interest rates because higher rates increase the opportunity cost of holding non-yielding bullion and boost the dollar.
“Key short-term support for gold comes in at $1,280, while resistance is seen around $1,300,” said Forex.com analyst Fawad Razaqzada.
“If the latter fails to offer resistance then we could see the resumption of the bullish trend again.”
Among other precious metals, palladium was up 0.5 percent at $1,546.04 an ounce and silver gained 0.1 percent to $15.09. Silver touched a low of $15 for a second day running, representing its weakest since the end of December.
