Gold price inches lower but rangebound after BoJ holds fire on easing

Gold retreated fractionally during early European trading after the Bank of Japan (BoJ) announced no further steps to strengthen that country’s economy.

But the metal remains confined to a very narrow ranges – just $10 since the start of the week and just $7 today – while the market awaits further direction from the European Central Bank (ECB) and Bank of England (BoE) today and US employment figures on Friday.

Spot gold was last at $1,580.55/1,581.35 per ounce, down $1.45 on the Wednesday’s close.

“Gold this morning is largely defending the levels it reached yesterday both in US dollar and euro terms, trading at around $1,585 and just shy of 1,220 euros,” Commerzbank said.

“We saw support from physical bidding around $1,575 and this sparked a $7 turnaround rally,” ANZ said. “[In the] near term, prices are nudging the key technical level around $1,585, which has held for the past four sessions.”

The BoJ kept its policy unchanged early on Thursday and voted against a proposal to step up monetary stimulus. But investors still believe that the bank will take robust action when it meets again in early April under the new leadership of Haruhiko Kuroda.

Later today, the ECB is widely expected to keep its benchmark interest rate at the historic low level of 0.75 percent, while there is an outside chance that the BoE may announce further easing measures. But the main event of the week is Friday’s February US non-farm payroll (NFP) numbers.

“Since the Fed entered the realm of unorthodox monetary policy four years ago, the NFP has played an increasingly important role in decision-making,” FastMarkets analyst Jono Remington-Hobbs said. “The magnitude of its importance intensified again when the Fed decided to make the duration of asset purchases contingent on the US unemployment rate falling below 6.5 percent.”

Yesterday, in a precursor to the main event, payroll firm ADP delivered a positive surprise, with its books adding 198,000 new jobs in February, much better than the forecast number of 172,000.

In wider markets, the exuberance in equities continues. The Dow Jones industrial index closed higher on Wednesday and today the Nikkei is up 0.3 percent at 11,968, though the Hang Seng is virtually unchanged. In Europe, both the FTSE 100 and the German DAX are just less than 0.5 percent higher.

The euro regained half a cent against the dollar to 1.3035 while base metals are firmer on the LME – three-month copper was up  $35.25 to $7,725.25 per tonne – while Brent crude oil is up 25 cents at $111.18 per barrel.

In other precious metals, silver nudged down one cent to $28.92 per ounce but strength in the PGMs remain – platinum is up $4 at $1,589/1,599 and palladium added $2 to $744/749.

“Palladium has performed best of all recently,” Commerzbank said, adding that in contrast to gold, neither palladium nor platinum has seen any significant outflows from ETFs lately.

(Editing by Mark Shaw)

Eddie van der Walt

About Eddie van der Walt

London-based, South African-born metals markets reporter, currently focusing on precious metals and the London Metal Exchange. All that glitters must be sold. Twitter: @EvdW