Gold futures climb, head for back-to-back gain as dollar slumps ahead of ECB

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Gold futures climb, head for back-to-back gain as dollar slumps ahead of ECB

By Mark DeCambre – published September 12, 2019 7:40am ET

Gold futures were on track to mark a second consecutive gain Thursday as investors awaited a highly anticipated policy action from the European Central Bank, which could influence trade in assets across the globe.

December gold GCZ19, +1.13% on Comex gained $7.60 an once, or 0.5%, at $1,510.70 an ounce, after rising 0.3% on Wednesday. Silver for December delivery SIZ19, +1.51% meanwhile, bounced 11 cents, or 0.6%, higher at $18.285 an ounce, after giving up less than 0.1% a day ago.

Trading for precious metals comes ahead of expected stimulus from the ECB, though equity markets in the U.S. also got a boost after President Donald Trump said late Wednesday that the U.S. would delay implementing fresh tariffs until Oct. 15 on $250 billion in China goods that were due to take effect on Oct. 1.

Trump’s action was taken by the market as a reflection of softening tensions amid the Sino-American trade clash on import duties and comes ahead of a new round of negotiations between the world’s superpowers to resolve the conflict that is set to take place at an unspecified date in early October.

However much of the focus on Thursday will be pinned to the ECB, with the market anticipating that policy makers in Europe will deepen a move into benchmark rates that are less that 0%, with an interest-rate cut of at least a 10 basis points to its key deposit rate. The policy statemenet is due at 7:45a.m. Eastern Time, with ECB President Mario Draghi expected to hold a news conference to discuss moves at 8:30a.m.

Policy measures implemented by the ECB would come ahead of the Federal Reserve’s highly anticipated monetary policy gathering, where the Jerome Powell-led group is expected to cut domestic interest rates by 25 basis points on Sept. 18

Reductions to global interest rates and some $17 trillion dollars in government debt that offer a negative yield have helped to bolster appetite for alternatives assets like gold, considered a haven during times of economic uncertainty.

“Gold is higher as the ECB is expected to announce more stimulants, the dollar and yields are dialing back yesterdays gains,” write Peter Cardillo, chief market economist at Spartan Capital Securities in a daily research note.

As measured by the ICEU.S. Dollar Index, a gauge of the buck against a basket of a half dozen currencies, was 0.1% lower at 98.553. softening of the greenback can make dollar-pegged commodities like gold more attractive to buyers using other currencies.