Gold Slips a Third Day Before ECB Meeting as ETF Holdings Fall

Holdings in ETF Gold Falls First Time in 19 Days
  • Holdings in exchange-traded gold falls first time in 19 days
  • Gold futures post longest losing streak in almost two months

Gold futures fell for a third straight day as investors pulled back ahead of the European Central Bank’s meeting on Thursday. Bullion in exchange-traded funds dropped for the first time in 19 days, ending the longest run since 2010.

Traders are awaiting clues on what additional steps ECB President Mario Draghi is prepared to take to boost growth in the region, said George Gero, a managing director at RBC Wealth Management in New York. The U.S. Federal Reserve is due to make a decision on interest rates next week.

The metal still is up 19 percent this year after demand for haven assets surged amid volatility in financial markets and expectations of slow growth potentially leading to further monetary intervention. At the same time, improvements in manufacturing and hiring have boosted odds that the Fed will raise rates in December to 73 percent on Wednesday, from 30 percent a month ago.

Markets are “putting back on the table the possibility of a June rate increase as well as a December increase, and we don’t know what sort of stimulus the ECB is going to be talking about,” Gero said in a telephone interview. The “recent move up in gold followed by some profit-taking is normal.”

Gold futures for April delivery dropped 0.4 percent to settle at $1,257.40 an ounce at 1:58 p.m. on the Comex in New York, a third straight decline and the longest skid in almost two months.

Holdings in exchange-traded funds fell 1.1 metric tons to 1,724 tons, according to data compiled by Bloomberg. That’s still near the highest level in 18 months.

“Over the medium term, the outlook for gold looks relatively positive,” Daniel Hynes, senior commodity strategist at Australia & New Zealand Banking Group Ltd., said in a Bloomberg Television interview. “We certainly feel those longer-term dynamics, which will be matched by a pick up in physical flows, will really support gold at these levels.”

  • Silver futures for May delivery slid 0.2 percent to $15.366 an ounce on the Comex.
  • On the New York Mercantile Exchange, palladium and platinum dropped.
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