Gold prices slipped during Asian trading hours on Thursday as investors anxiously wait for the policy rate statement from the European Central Bank (ECB), later today. Silver prices also edged lower in early trading on Thursday.
At around 6:30 a.m. EST, gold futures for February delivery inched down 0.09% to $1,677.30 an ounce while spot gold slipped 0.06% to trade near $1,676 an ounce., having hit an intra-day high of $1,680.95 an ounce, as some buying orders surfaced from mainland China, ahead of the week- long Lunar Year Celebrations, which kicks off from this Sunday.
The ECB is expected to keep benchmark interest rate unchanged at 0.75%. However, the European leaders are stepping up pressure on the central bank to ease the euro, since they believe it is overvalued. The recent sharp fall in Japanese Yen has also triggered hue and cry from European leaders.
While the ECB might not give an immediate indication on whether the euro is overvalued, any attempt at weakening the currency in coming days, since the economy has not bottomed out, might help bullion, believes Joyce Liu, an investment analyst at Phillip Futures in Singapore, according to Thomson Reuters.
The euro and gold prices are strongly correlated. If the ECB decides to weaken the euro then fear of currency debasement could trigger the demand for inflation hedge bets such as gold.
Meanwhile platinum group metal continued to rally on Thursday as speculators and investors are taking bullish bets on these metals in the backdrop of improving global industrial production outlook. Both platinum and palladium are used as auto-catalysts. A data provided by Reuters showed that both platinum and palladium traded near their highest levels in 17 months.
“We see a lot (of) leading economic indicators supporting platinum and palladium. The economic outlook seems to be brighter than most of us have expected,” said Liu.
Silver futures were down 0.26% in early trading.
In pre-market trading, the iShares Silver Trust (ETF) (NYSE: SLV
) was down 0.13%, and the ProShares UltraShort Silver (ETF) (NYSE: ZSL
) was down 0.27%.