Gold advanced after the European Central Bank indicated it wouldn’t cut interest rates, boosting the euro and making dollar-denominated bullion less expensive for investors.
Gold for immediate delivery rose 0.7 percent to $1,281.55 an ounce by 9:17 a.m. in Singapore after climbing 1.5 percent the day before, according to Bloomberg generic pricing. The metal has risen 1.8 percent this week, on course for its second weekly gain. Asian stocks, meanwhile, headed for their first weekly drop in a month.
The euro could have its best week in more than a month against the dollar after ECB President Mario Draghi said more rate reductions probably won’t be needed after policy makers cut the benchmark rate to zero. Draghi also said the recovery in the euro area continues to face hurdles including subdued demand in emerging markets and volatile financial markets. These factors have spurred investors to seek shelter in haven assets and powered gold’s 21 percent surge this year.
“Gold rallied after Draghi’s comment of ‘no need for further interest rate cuts’,” Australia & New Zealand Banking Group Ltd. wrote in a note Friday. “The recent change in policy stance will support financial buying in gold.”
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Investors resumed building holdings in exchange-traded funds backed by gold, with assets rising 4.1 metric tons on Wednesday after dropping 1.1 tons the day before. The total stood at 1,728.1 tons, the highest since August 2014, according to data compiled by Bloomberg.
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