Mubasher: Gold prices edged up on Wednesday, as investors awaited the European Central Bank’s (ECB) policy meeting, in which it is widely set to unveil stimulus and slash interest rates, Reuters reported.
By 9:05 am GMT, spot gold climbed by 0.57% to $1,494.31 per ounce, having hit $1,483.90 per ounce, its lowest since 13 August, while US gold futures went up by 0.12% to $1,501 per ounce.
While the ECB is set to reduce further its ultra-low interest rates, “the meeting could serve as a potential catalyst [for gold] and investors are already buying into the rate cut expectations,” CMC Markets analyst Margaret Yang Yan was quoted by Reuters.
European policymakers are eying a raft of measures, including a rate cut, a pledge to maintain low borrowing costs for longer, and a compensation to banks over the impact of negative rates, Reuters said, citing five sources familiar with last week’s discussions.
Investors are benefiting from a steep correction from the recent highs, Yan said.
As risk-on sentiment was supported ahead of the ECB’s decision, hopes were for the US Federal Reserve to further relax its monetary policy at next week’s meeting in the middle of a broader global slowdown.
That said, the fundamental backdrop remained generally supportive for the yellow metal, when taking unresolved major factors of risk-off sentiment into consideration, according to DailyFx senior currency strategist Ilya Spivak.
“Both Brexit and the US-China trade war are ongoing concerns, as is the broader slowdown in global growth [...] That probably encourages central banks to remain dovish,” Spivak was quoted by the news agency.