Gold along with the other precious metals slipped back this afternoon as investors await the outcome of the European Central Bank (ECB) policy meeting tomorrow.
With gold close to its 200-day moving average of US$1,175, trading could be quiet ahead of the ECB’s announcement and the Federal Open Market Committee meeting next week.
The ECB is unlikely to adjust its €60bn per month asset purchase programme in October, but investors believe it may hint at more stimulus later this year.
A member of the ECB Governing Council, Christian Noyer, said there was no need to change the current level of quantitative easing.
FXTM Research Analyst Lukman Otunuga, said: “After September’s deflationary CPI reading of -0.1%, the ECB has been provided a compelling case to come forward to provide additional stimulus measures in the near future.”
He added that ECB president Mario Draghi may be expected to reiterate his dovish mantra on the health of the Euro.
If the ECB does look at further quantitative easing measures, it will weaken the euro pushing the dollar higher, impacting the gold price.
Elwin de Groot Senior Eurozone Strategist at Rabobank said: “We stick to our view that an expansion/extension of the asset purchase program is the most likely next step by the ECB, but we believe this will take place in December at the earliest.”
Gold was trading US$10 lower at US$1,165 today.
Elsewhere, silver eased 1.7% to US$15.65 while platinum lost 1.6% to US$1,003.
Randgold Resources down 62p to 4,461p
Fresnillo down 12p to 721p
Anglo American down 27p to 595p