Gold prices ease

LONDON. — Gold eased yesterday as the dollar firmed ahead of a European Central Bank (ECB) meeting which will be watched for signs of officials moving away from an ultra-loose monetary policy.

The ECB is expected to lay the groundwork for a northern autumn policy shift when it meets, after ECB chief Mario Draghi opened the door to tweaks in a speech in Portugal in June.

The spot gold price was down 0,2 percent at $1 238,04 per ounce at 10.48am GMT, while US gold futures for August delivery were 0,4 percent lower to $1 237,40 per ounce.

The euro was down 0,1 percent against the dollar before the policy decision, but hovered close to a recent a 14-month high. A stronger dollar tends to pressure assets priced in the US currency.

“It has been currency swings and rate swings which have been driving gold as of late,” Julius Baer analyst Carsten Menke said.

“You still have speculation in the market that the ECB may shift to a less expansionary policy earlier than expected. We tend to disagree.

“We think the potential for disappointment at the meeting today is bigger than the potential for a positive surprise, so this is rather something we see as gold negative from the currency side.”

Tighter monetary policy in the eurozone could be seen as either positive or negative for gold, depending on whether the market responds more favourably to a stronger euro, or less favourably to a rise in the opportunity cost of holding the non-yielding metal.

The ultra-loose policy in place since the last decade’s global financial crisis has been a key factor supporting gold prices in recent years.