Gold extended its drop as equities climbed, eroding demand for a haven, and investors await a monetary policy review from the European Central Bank.
Bullion for immediate delivery fell as much as 0.3 percent to $1,249.09 an ounce and traded at $1,251.95 by 11:17 a.m. in Singapore after prices lost 1.1 percent over the previous two days, according to Bloomberg generic pricing. Asian stocks advanced after U.S. equities gained and crude oil closed at its highest level in three months.
“A slight retreat in safe haven demand may be weighing on gold as oil and equities are rising at the moment,” said Helen Lau, an analyst at Argonaut Securities (Asia) Ltd. in Hong Kong. “Gold should go higher as investors expect more easing from the ECB to reflate the economy.”
Gold-backed assets in exchange-traded funds shrank for the first time in 19 days, ending the longest run since 2010, according to data compiled by Bloomberg as of Tuesday. While holdings fell 1.1 metric tons to 1,724 tons, that’s still near the highest in 18 months.
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The metal has gained 18 percent this year after volatility in financial markets spurred demand for haven assets amid expectations that slow growth will lead to further monetary intervention. Updates from the ECB on Thursday and the U.S. Federal Reserve next week may shed light on the potential for more stimulus and the trajectory of interest rates.
- Investors and economists predict yet more stimulus will be announced by the ECB to stave off deflation in the euro area. The rate decision is due at 1:45 p.m. in Frankfurt, with President Mario Draghi holding a media briefing 45 minutes later.
- Silver’s 10 percent advance this year has trailed gold. The price was little changed on Thursday. Platinum was also flat while palladium sank 0.9 percent.
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