Gold prices inch higher; all eyes European Central Bank meet

Gold prices inch higher; all eyes European Central Bank meet

European Central Bank policy makers are leaning toward a bundle that contains a rate reduction, a pledge to keep rates low for more and reimbursement for banks within the side-effects of negative prices, five sources familiar with the discussion said last week.

Spot gold was up 0.3percent at $1,490.09 per ounce, as of 0414 GMT. In the past session, prices dropped to their lowest since Aug. 13 at $1,483.90.

“The ECB is expected to reduce further the interest rate into negative territory… The assembly could serve as a possible catalyst (for gold) and investors are already buying to the rate cut expectations,” stated Margaret Yang Yan, a market analyst at CMC Markets.

Given that gold has had such a profound correction from its current peak, investors are buying on dips, Yan added.

Bullion prices have shed more than 4 percent, or over $60, in under a week, largely hurt by a wide uptick in risk appetite.

ECB policymakers are leaning toward a bundle that contains a rate reduction, a pledge to keep rates low for more and reimbursement for banks within the side-effects of negative prices, five sources familiar with the discussion said last week.

The US Federal Reserve is also widely anticipated deliver an interest rate cut next week.

“The big picture is international central banks are prepared to lower rates of interest and also carry out more quantitative easing to spur growth… In the mid to long term perspective, lower interest rate environment is bullish for gold price,” Yan said.

On the trade front, a senior White House advisor tamped down expectations on Tuesday for the upcoming rounds of US -China trade talks, urging investors, companies and the public to be patient about resolving the trade dispute.

Spot gold still targets $1,453, as it’s cleared a service at $1,497 per ounce, based on Reuters technical analyst Wang Tao.

The dollar index was stable, while Asian stock markets held company and bond yields rose on Wednesday.

Among other precious metals, silver rose 0.5percent to $18.10 per oz.

Palladium was flat at $1,561.14 percent, while platinum gained 0.6percent to $936.05.

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