Mubasher: Gold prices inched lower on Thursday, but were still close to their highest level in two weeks reached in the previous session, as economic slowdown concerns were stoked by dovish signals from the US and European central banks, Reuters reported.
By 9:15 am GMT, spot gold declined 0.27% to $1,304.43 per ounce, after hitting $1,306.58 per ounce its highest level since 28 March, while US gold futures fell 0.45% to $1,308 per ounce.
This came as the dollar hovered near two-week low tapped last session, as the Federal Open Market Committee’s (FOMC) March meeting minutes underpinned the Fed’s dovish policy stance, against the backdrop of global economic slowdown.
At 9:18 am GMT, the US dollar index, a gauge for the greenback against six major rivals, ticked down 0.03% to 96.9160.
In the same vein, the European Central Bank (ECB) maintained its dovish stance, pointing to downside risks to the Eurozone economy.
“Policymakers are continuing to hint that they are not in a rush to hike interest rates, particularly the US Fed, and the ECB also did not change their monetary policy,” IG Markets analyst Kyle Rodda was quoted by Reuters.
This dragged on bond yields worldwide, making the yellow metal much more attractive, Rodda added.
US Treasury yields dropped on Wednesday after official data showed lukewarm inflation, further supporting the Fed’s decision to hold interest rates at their current level, while in Europe, bond market saw a decline.
ECB President Mario Draghi raised the prospect of further support the Eurozone economy, if a sluggish growth persisted.
It is worth noting that lower interest rates and bond yields tend to make non-yielding gold more attractive for investors as they lower its opportunity cost.
Currently, investors are closely monitoring the developments in the on-going trade negotiations between the US and China, amid hopes of a quicker resolution to a year-long trade conflict.
Both sides agreed on a mechanism to enforce any trade deal they reach, including setting up “enforcement offices,” the US Treasury Secretary said on Wednesday.