Gold Little Changed Above 11-Week Low on Demand to Dollar

By Glenys Sim and Nicholas Larkin

Gold was little changed above an 11-week low in New York as investors weighed speculation reduced prices will spur purchases as the dollar strengthens.
Gold’s 14-day relative-strength index fell this week toward the level of 30 that suggests to some traders who study technical charts that prices may be poised to rebound. The dollar climbed to a seven-month high against 10 major currencies after the European Central Bank unexpectedly cut interest rates, and before data due tomorrow that may show U.S. companies boosted payrolls in August by more than 200,000 for a seventh-straight month.
Bullion rose 5.7 percent this year as traders assessed political unrest against the outlook for higher U.S. interest rates. Russian President Vladimir Putin and his counterpart Petro Poroshenko agreed yesterday on steps to end more than five months of
fighting in Ukraine’s eastern regions. European Union diplomats discussed further sanctions, possibly by the end of the week, to punish Putin for aiding pro-Russian rebels, an allegation the government in Moscow denies.
“Physical demand in the Far East did help buoy prices,” James Steel, an analyst at HSBC Securities (USA) Inc., wrote in a note. Geopolitical events “may have greater influence on gold in the near term. Bullion prices are likely to stay under pressure, especially if the U.S. dollar gains.”
Gold for December delivery was little changed at $1,270.90 an ounce by 8:07 a.m. on the Comex in New York. It reached $1,261.90 yesterday, the lowest since June 17. Bullion for immediate delivery was also little changed at $1,269.77 in London, according to Bloomberg generic pricing.
Futures trading volume was 16 percent below the average for the past 100 days for this time of day, data compiled by Bloomberg show.

ECB Rates

The ECB reduced all three of its main interest rates by 10 basis points in a bid to spur economic growth and stave off the threat of deflation. President Mario Draghi will speak to reporters at 2:30 p.m. in Frankfurt.
If the ECB “announces some aggressive easing, the euro could lose further ground against the dollar, which could lead to further losses in gold,” Abhishek Chinchalkar, an analyst at Mumbai-based AnandRathi Commodities Ltd., said in a report today before the central bank’s decision.
The Federal Reserve, which has been cutting bond buying, is will announce its latest monetary policy on Sept. 17.
Silver for December delivery added 0.1 percent to $19.21 an ounce in New York. Platinum for October delivery was 0.3 percent lower at $1,408.30 an ounce, after touching a four-month low of $1,404 yesterday.
Palladium for December delivery rose 0.8 percent to $882.95 an ounce. Prices retreated from a 13-year high of $913 earlier this week to as low as $870.05 yesterday as concern eased that supplies from Russia, the largest producer, will be disrupted.