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Gold
futures were on pace to end the week on a sour note with investors disappointed
that fresh central bank stimulus measures are unlikely over the next couple
months.
Gold for
August delivery on the Comex division of the New York Mercantile Exchange fell
$6.20 or 0.5 percent to $1,324.80 per ounce. Trade has ranged from $1,321.50 to
$1,334.0.
Yesterday
in Frankfurt, the European Central Bank (ECB) and President Mario Draghi
decided to leave rates unchanged after the Brexit-induced market shockwaves
have faded somewhat.
Draghi
and his fellow central bankers gave no indication that the current 1.7
trillion-euro quantitative-easing plan needed to be increased following the UK
vote to leave the single market.
The
council doesn’t meet again till September, but investors aren’t anticipating
any adjustment to the bond-buying programme in the near-term.
“It looks
like the gold market going to end the week about where it begin amid choppy
trading,” Jim Wyckoff, contributor to Kitco News, said. “However, some market
watchers are a bit disappointed the Bank of Japan and European Central Bank did
not announce, or hint at, fresh monetary policy stimulus measures coming soon.”
Nevertheless,
both economic regions are combatting tepid growth and years of non-inflation
despite negative interest rates and billions in asset purchases.
Signs of
waning investor interest appeared overnight with exchange-traded-funds (ETFs)
tracked by FastMarkets declining by 1.16 tonnes. Fund positioning has been
holding around a three-year high in the wake of the Brexit decision.
“Gold
prices are consolidating after a very strong rally,” William Adams, head of
research at FastMarkets, said. “We have generally expected dips to be supported
but perhaps not as strongly supported as they have been.”
“We
expected more profit-taking but it looks as though sentiment is long-term
bullish and most longs are in for the long term,” Adams continued.
Meanwhile
in the US, Donald Trump officially accepted the Republican Presidential Nominee
and presented a victory speech. The election is only 108 days away with eyes
now turning to the Democratic National Convention, which starts next week.
Elsewhere,
starting Saturday G20 finance ministers and central bankers will converge in
Chengdu, China, to discuss the Brexit decision, global exchange rate policy and
downturn in the yuan.
In data
so far today, Japan’s manufacturing PMI improved to 49 from 48.1. Flash manufacturing
and services PMIs out of eurozone were also better than expected. Later, US
manufacturing figures are due for release.
Turning
to European markets, Germany’s DAX and France’s CAC-40 were each up 0.1
percent, while the dollar strengthened 0.1 percent to $1.1015 against the euro.
As for
other precious metals, Comex silver for September delivery fell 10.5 cents or
0.5 percent to $19.710 per ounce. Trade has ranged from $19.670 to $20.020.
Platinum for October settlement declined $8.40
or 0.8 percent to $1,099.60 per ounce while palladium at $683.85 was down $1.60
or 0.2 percent.
News article attributed to www.bulliondesk.com.