Thursday, July 5, 2012

Gold stays put ahead of ECB, ignores firm dollar

Gold held steady around $1,615 an ounce on Thursday, as the anticipation of a rate cut by the European Central Bank offset the impact of a stronger dollar.

FUNDAMENTALS

Spot gold was little changed at $1,614.79 an ounce by 0020 GMT.

US gold futures contract for August delivery edged down 0.4% to $1,615.60.

Investors are keeping an eye out for decisions by the ECB and Bank of England, with expectations that the ECB will cut interest rates to a record low and the BoE will announce new bond buying.

Surveys on Wednesday showed all of Europe's biggest economies are in recession or heading there and there is little sign things will improve soon.

Adding to concerns about the health of global economy and pressure for central banks to take more accommodative stance, China's service sector grew at its slowest pace in 10 months in June, the China HSBC services purchasing managers index showed.

MARKET NEWS

The euro wallowed near one-week lows on Thursday, struggling to find any traction ahead of a widely expected rate cut by the ECB, while the dollar gained half a percent against a basket of currencies.

* Benchmark oil prices hovered below $100 a barrel on Thursday after sharp gains earlier in the week, as new evidence of grim economic conditions in Europe offset expectations of fresh stimulus measures.

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