Gold is set to decline in London as a rally to a two-week high spurs investors to sell the metal before European Central Bank policy makers meet tomorrow.
Bullion gained yesterday after data this week showed deteriorating manufacturing from the U.S. to China, fueling speculation central banks will add to stimulus. The euro fell versus the dollar amid expectations the ECB will cut interest rates to a record low tomorrow. Holdings in gold-backed exchange-traded products climbed 4.6 metric tons to a record 2,412.4 tons yesterday, data compiled by Bloomberg show.
“After the rally, some position squaring is taking place as participants prefer to reduce exposure to gold ahead of tomorrow’s ECB decision,” said Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland.
Bullion for immediate delivery was little changed at $1,615.65 an ounce by 4:45 p.m. in London. Prices reached $1,625.07 yesterday, the highest since June 19. August-delivery futures were 0.4 percent lower at $1,615.80 on the Comex in New York.
U.S. markets are closed today for the Independence Day holiday and “volumes are likely to be subdued,” Andrey Kryuchenkov, an analyst at VTB Capital in London, wrote in a report. Gold at the afternoon “fixing,” used by some mining companies to sell output, declined to $1,613.50 in London from $1,617 this morning.
The metal is up 3.3 percent this year after 11 consecutive annual gains. ETP holdings increased 2.4 percent this year and have climbed every year since at least 2004. Bullion jumped about 70 percent as the Federal Reserve bought $2.3 trillion of debt in two rounds of so-called quantitative easing ending in June 2011.
Silver for immediate delivery declined 0.5 percent to $28.125 an ounce. Palladium decreased 0.1 percent to $599.28 an ounce. Platinum was down 0.4 percent at $1,482.75 an ounce.
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