The ECB cut its deposit rate below zero and said it would announce further measures later today as policy makers try to counter the prospect of deflation. The dollar climbed to the highest since February versus the euro after the announcement.
Gold slumped 28 percent last year on speculation the Federal Reserve would ease stimulus as the economy strengthens. Data due tomorrow may show the U.S. added 215,000 jobs in May, after a report yesterday found service industries grew at the fastest pace in nine months last month, sending the Standard & Poor’s 500 Index of equities to a record.
“The cut was much needed and much anticipated,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said today by e-mail. “Bullion will continue trading against the dollar with the press conference ahead and the U.S. nonfarm payrolls tomorrow.”
Gold for August delivery lost 0.1 percent to $1,243.30 an ounce by 7:56 a.m. on the Comex in New York. It reached $1,240.20 on June 3, the lowest since Jan. 31. Futures trading volumes were 30 percent below the average for the past 100 days for this time of day, according to data compiled by Bloomberg. Bullion for immediate delivery slipped 0.1 percent to $1,243.05 in London, according to Bloomberg generic pricing.
The metal’s 14-day relative-strength index since May 30 has been below the level of 30 that suggests to investors who study technical charts that prices may rebound. It was at 28.3 today.