Gold dropped on Thursday after rising nearly 1 percent in the previous session, as the dollar firmed and Asian stocks stayed near eight-month highs on expectations of an interest rate hike by the Bank of England.
Investors bet the BoE will cut interest rates for the first time in more than seven years to ward off recession following Britain’s vote to leave the European Union.
The central bank is expected to halve its benchmark interest rate to a record low of 0.25 percent when it makes a monthly policy statement at 1100 GMT later in the day.
Spot gold was down 0.2 percent at $1,339.31 per ounce by 0358 GMT. It rose about 0.8 percent on Wednesday, closing at $1,342.45, after touching a session high of $1,345.20.
“The market has been a little quiet and is just waiting for the Bank of England rates,” said William Wong, assistant head of dealing for Wing Fung’s precious metals desk.
Low interest rates boost the appeal of non-interest bearing assets such as bullion.
Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong, said gold prices had steadied due to a number of stabilising factors including the appointment of a new prime minister in the UK, and that he expected interest rate cuts by the Japanese and England central banks.
“Major central banks including the Bank of England and the European Central Bank are expected to relax their monetary policies, while the U.S. Federal Reserve is reluctant to raise interest rates. People are expecting these central banks to relax their monetary policies in the wake of the financial and political uncertainty,” he added.
Philadelphia Fed President Patrick Marker said late on Wednesday that the central bank would likely opt for a “fairly shallow” series of U.S. interest rate hikes, and that he wanted to “let it play out a bit” before backing a policy tightening.
The dollar was up 0.2 percent at 104.64 yen, pulling closer to its post-Brexit high of 104.98 yen touched on Tuesday, as investors remained focused on whether the Bank of Japan will expand its monetary stimulus at its policy meeting later this month.
Among other precious metals, spot palladium was up 0.3 percent at $642.98 an ounce, after hitting an eight-month high of $647.20 in the previous session.
Silver edged down 0.2 percent to $20.29 an ounce, while platinum dipped 0.2 percent to $1,092 an ounce.
Source: Reuters
