Gold climbs with ECB, U.S. fiscal cliff in focus

By Myra P. Saefong and Robert Daniel, MarketWatch

SAN FRANCISCO (MarketWatch) — Gold futures climbed Thursday following the European Central Bank’s decision to keep its monetary policy intact and as investors worried about the so-called U.S. fiscal cliff.

Gold for December delivery GCZ2 +0.57%  rose $9.40, or 0.6%, to $1,723.50 an ounce on the Comex division of the New York Mercantile Exchange.

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The ECB left its key lending rate unchanged at 0.75%, as expected, and made no changes to monetary policy on Thursday. See: Focus on Draghi as ECB leaves rates unchanged.

Europe is dominating the news “with the ECB keeping accommodative policy in place and rates steady,” said Jeffrey Wright, a managing director at Global Hunter Securities. “ECB policies, much like our own, eventually lead to inflation, which support gold.”

Separately, the Bank of England left monetary policy unchanged, as expected, and kept the key lending rate at a record low 0.5%.

For now, there are three near-term catalysts which should be supportive for gold, said Wright: a U.S. debt-ceiling limit by mid-December, a plan to deal with the fiscal cliff before January and the Federal Reserve meeting in December which holds the “potential to again support or extend quantitative-easing measures.”

The fiscal cliff refers to a combination of tax hikes and spending cuts that will come into effect on Jan. 1 unless politicians reach a budget deal.

In U.S. economic news Thursday, data showed that the nation’s trade deficit fell by 5.1% in September, dropping to its lowest level in nearly two years as exports rebounded and imports rose at a slower rate. See: U.S. trade deficit drops 5.1% in September.

The number of Americans who filed new applications for unemployment benefits fell by 8,000 to a seasonally adjusted 355,000 in the week ended Nov. 3, according to the Labor Department. See: U.S. jobless claims drop.

Gold moves

In five trading days this month through Wednesday, gold has closed down three times and up twice. The yellow metal for December delivery was down a total of $5, or 0.3%, in the month through Wednesday.

Gold “is displaying relative strength and living up to its reputation as a store of value and a safe haven,” Commerzbank analysts wrote in a Thursday report.

Gold found support yesterday from robust ETF inflows: Gold exchange- traded funds tracked by Bloomberg saw their gold holdings surge by more than four tons to a record 2,592 tons, the analysts said.


Gold prices push higher on Thursday.

Strength in gold Thursday came despite some further gains for the U.S. dollar, which makes the dollar-denominated commodity more expensive for holders of other currencies.

The dollar index DXY +0.05% , which benchmarks the buck against a basket of six rival currencies, traded at 80.844, up from 80.781 late Wednesday.

Among other major metals traded on Comex, silver followed gold higher. Silver for December delivery SIZ2 +1.58%  was up 44 cents, or 1.4%, to $32.08 an ounce.

And copper for delivery in December HGZ2 +0.65%  added 2 cents, or 0.5%, to $3.46 a pound.

January platinum PLF3 +0.25%  reversed course and rose $4.20, or 0.3%, to $1,543.60 an ounce. Palladium for December delivery PAZ2 +0.49%  also turned higher, trading up $3.70, or 0.6%, at $614 an ounce. 


Myra Saefong is a MarketWatch reporter based in San Francisco.Robert Daniel is MarketWatch’s Middle East bureau chief, based in Tel Aviv.

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