(Reuters) - Gold slipped on Thursday, holding near a multi-week low as the dollar gained against the euro after the European Central Bank postponed an interest rate rise, but the ECB’s gloomy economic outlook limited the metal’s fall.
Spot gold was off 0.1 percent to $1,285.51 per ounce at 10:23 a.m. EST(1523 GMT). It hit $1,280.70 on Tuesday, its lowest level since Jan. 25.
U.S. gold futures declined 0.1 percent to $1,284.30 per ounce.
The ECB slashed its growth and inflation forecasts for 2019 and lowered those for 2020 and 2021 on Thursday, acknowledging that Europe’s slowdown was longer and deeper than earlier thought.
“The good news here for gold is that the interest rate environment globally is unlikely to move much higher,” Bart Melek, head of commodity strategies at TD Securities in Toronto, with reference to the ECB statement.
“We do have reason to believe the U.S. dollar will be firm for now and that historically tends to suppress gold prices. But at these levels, gold is still very supported at $1,275 and $1,285.”
The euro dipped against the dollar following the ECB’s monetary policy statement, which was a surprise for many investors. The dollar, measured against a basket of currencies, rose to a near three-month peak as the euro sold off. [USD/]
Germany, the euro zone’s biggest economy, stagnated in the fourth quarter and Italy is in outright recession, raising the risk that a temporary slowdown will become a more lasting downturn as business confidence is sapped by a steady flow of negative news.
The ECB announcement compounded worries of a global slowdown, helping bolster the overall sentiment for bullion, considered a safe store of value during times of economic or political uncertainty.
Investors have now turned their attention to the U.S. non-farm payrolls report on Friday, which could provide further signals on the strength of the economy and how it would affect the Federal Reserve’s monetary policy.
Also supporting gold was strong buying from central banks, analysts said, with China, the world’s biggest consumer of the metal, increasing its gold reserves to 60.260 million fine troy ounces in February from 59.940 million troy ounces at end-January.
Palladium fell 1.34 percent to $1,517.69 per ounce and silver fell 0.47 percent to $15. Silver touched a low of $14.96, its weakest since the end of December.
Platinum was down 1.02 percent at $818.33 per ounce.
Reporting by Karthika Suresh Namboothiri and Swati Verma in Bengaluru; Editing by Susan Thomas