Gold edges higher

LONDON. Gold edged higher yesterday after the dollar dropped following remarks by the head of the European Central Bank, although activity was muted ahead of a US central bank meeting this week.

Spot gold was up 0,3 percent at $1 202,59 an ounce by 1350 GMT, after declining as much as 1,3 percent on Friday.

US gold futures gained 0,5 percent to $1 207 an ounce. Liquidity was thin during Asian trading hours yesterday as markets in Japan and China were closed for a holiday.

The dollar index fell after comments by ECB President Mario Draghi on wage growth and vigorous inflation lifted the euro.

“I remain constructive on gold after we’ve seen it consolidate for the past month. The risk to the dollar is some additional weakness, but at this stage we have to maintain a neutral stance,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

Gold needed to break above $1 212 to make further progress on the upside, he added.

Investors are awaiting details from the two-day Federal Reserve meeting concluding on Wednesday, when the US central bank is widely expected to raise benchmark interest rates and shed light on the path for future rate hikes.

“The question is what kind of wording is going to accompany that hike. Based on that, gold is unlikely to make much of a move ahead of that meeting,” Hansen said.

Gold has fallen more than 12 percent since a peak in April against a backdrop of trade disputes and as rising US interest rates diminish demand for non-interest bearing bullion. Reuters.