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Gold Hits One-Week; ECB Meeting In Focus

Gold steadied near a one-week high on Thursday as the dollar weakened, but the yellow metal traded in a narrow $8 range as investors held large bets ahead of the  European Central Bank’s monetary policy decision due later in the day.

Spot gold was flat at $1,946.25 per ounce by 0511 GMT, after hitting its highest since Sept. 3 at $1,950.51 on Wednesday. U.S. gold futures were steady at $1,954.90.

The ECB is all but certain to keep policy unchanged when it announces its decision at 1145 GMT, which will then be followed by a news conference by President Christine Lagarde.

Major central banks have rolled out unprecedented stimulus measures and kept interest rates low, driving gold to new highs because of its role as a hedge against inflation and currency debasement.

Ample money supply, lower interest rates and macro uncertainty should support gold investment. Physical demand is recovering, so we see the gold price reaching $2,300/oz next year. The U.S. dollar is a bit lower, stocks bounced a bit and that essentially carried over to gold as well.

Gold may also be waiting for U.S. CPI data and the Federal Reserves’s two-day meeting next week, in addition to ECB’s announcement which is a key risk event. 

On the technical front, the RSI is at 51.53% and suggests that the market can move in the upward direction. The current price is trading above all the moving averages. The stochastic is forming an upward crossover. 

Overall Bias is Positive and Short-term sell trades can be initiated with below mentioned Stop Loss and Profit targets. 

Trade Suggestion– BUY GOLD AT 1949.55, TAKE PROFIT AT 1971.75 AND STOP AT 1973.75