Gold Traders Struggle to Parse Clues From Draghi on Stimulus

  • Prices swings between gains and losses as ECB looks at options
  • Holdings in gold-backed exchange traded funds fell, data show

Mario Draghi has put the gold market on hold.

Bullion swung between gains and losses as investors assessed the outlook for economic stimulus after the European Central Bank president said officials will look at redesigning the ECB’s quantitative-easing program. Draghi ordered the review to ensure the program doesn’t run out of bonds to buy. He played down the need to commit to new stimulus for now. Gold futures closed lower.

“Draghi’s failure to add to or extend QE hasn’t inspired gold, which is trading indecisively near recent highs,” Tai Wong, the director of commodity products trading at BMO Capital Markets in New York, said in an e-mail.

The metal has rallied 27 percent this year as the Federal Reserve held off on raising U.S. borrowing costs and central banks including the ECB boosted stimulus to support growth. While signs of cracks in the U.S. economy pushed gold futures to a two-week high on Wednesday, uncertainty on the path of easing in the euro area helped sap momentum.

Gold futures for December delivery fell 0.6 percent to settle at $1,341.60 an ounce at 1:43 p.m. on the Comex in New York. Aggregate trading was 16 percent below the 100-day average for this time, data compiled by Bloomberg show. Prices touched $1,357.60 on Wednesday, the highest since Aug. 19.

In the U.S., where policy makers are watching for consistent signs of strength in the labor market before raising interest rates, filings for unemployment benefits unexpectedly dropped to the lowest in seven weeks. The odds of a rate hike later this month rose to 28 percent, from 22 percent a day earlier, Fed funds futures data show.

In ETFs and other metals:

  • Holdings in bullion-backed exchange-traded funds fell 0.9 metric ton to 2,030.1 tons on Wednesday, data compiled by Bloomberg show.
  • Silver futures settled lower on the Comex, while platinum and palladium futures slipped on the New York Mercantile Exchange.
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