Prices for the yellow metal had climbed in early dealings, following a round of fresh U.S. economic data and another contentious U.S. presidential election debate.
December gold GCZ6, +0.82% fell $2.40, or 0.2%, to settle at $1,267.50 an ounce. Prices settled at $1,269.90 on Wednesday, a more than two-week high. December silver SIZ6, +2.19% lost 11.4 cents, or 0.7%, to $17.549 an ounce.
The ECB on Thursday left interest rates unchanged, as expected.
Traders took comments from the central bank’s President Mario Draghi his “as dovish, particularly those suggesting the ECB would not end its QE program abruptly in March, supporting speculation the program could be extended and/or wound down over time though tapering,” said Colin Cieszynski, chief market strategist at CMC Markets. “More information is likely in December.”
In reaction to the ECB’s latest update, the ICE U.S. Dollar Index DXY, +0.22% a measure of the U.S. currency against six rivals, was up about 0.3% as the British pound GBPUSD, -0.2176% fell by 0.2% versus the greenback. The dollar and gold often move inversely because a firmer buck leaves dollar-priced commodities less desirable to purchasers using another currency.
Still, gold futures were up roughly 1% week to date with the dollar index trading below the multimonth highs hit earlier this month. Spotty U.S. economic data has caused some investors to rethink the likelihood of a late-year Federal Reserve interest-rate hike.
“Gold received a welcome boost this week with the metal charging towards $1,270 as the combination of dollar weakness and slightly diminishing expectations over the Fed raising U.S. rates in December attracted bullish investors,” said Lukman Otunuga, an FXTM research analyst.
Prices have also found overall support amid the “growing uncertainty ahead of the U.S. presidential election and Brexit jitters, which triggered a wave of risk aversion consequently bolstering the yellow metal’s safe haven allure,” said Otunuga.
Gold investors are juggling a go-slow Fed against signs of a pickup in inflation in the U.S. and abroad in recent data releases. Inflation risks tend to be supportive for gold, and did give the metal a lift earlier in the week.
The next Fed meeting is Nov. 1-2, but expectations for a rate increase at that meeting, so close to the election, are slim. Those odds gain, to around 60%, for a December hike, although investors continue to question how aggressive the Fed will need to be and the panel is divided.
Precious metals, which don’t offer a yield, can see demand diminish compared with investments that bear a yield in a rising-rate climate.
U.S. economic data issued Thursday did little to sway the market’s short-term Fed interest-rate expectations. Jobless benefits claims rose in the latest week to a six-week high but pace remains historically low. Separately, a measure of Philadelphia-area business conditions slumped in October. See the economy and politics page.
Taking a look at the longer-term picture for gold, Rob Haworth, senior investment strategist at U.S. Bank Wealth Management, was ‘somewhat cautious.”
The caution reflects “a range bound market which is likely stuck between Fed rate increases and a world full of political risks, including the U.S. presidential election as well as elections in France and Germany next year, a constitutional resolution in Italy and the likely invocation of Article 50 by the United Kingdom to leave the EU,” he said.
Rounding out action among the metals, December copper HGZ6, +4.41% shed less than a cent, or 0.4%, to $2.096 a pound. January platinum PLF7, -0.42% lost $8.10, or 0.9%, to $935.40 an ounce and December palladium PAZ6, +0.48% ended at $632.85 an ounce, down $2.65, or 0.4%.
In related exchange-traded fund trading, the SPDR Gold Trust GLD, +0.76% fell 0.2%, while the VanEck Vectors Gold Miners ETF GDX, +1.67% gave up 0.9%.