Gold lost ground in early-morning London trading despite news that the ECB will take a tougher stance on Greek debt, which should be bullish for safe-haven assets.
The spot gold price was last at $1,264.40/1,265.20 per ounce, down $7.20 on Wednesday’s close and trading in a $10 intraday range.
Other metals also recorded modest losses – silver at $17.24/17.29 per ounce was down 10 cents, platinum was $2 lower at $1,235/1,240 and palladium slipped $2 to $787/793.
“The precious metals are to varying degrees still consolidating after the strong rallies in January. For now, we feel this consolidation will lead to further strength down the road,” FastMarkets analyst William Adams said.
In a move that could prompt a flight to the safety of gold, the European Central Bank will from February 11 no longer accept junk-status government bonds from Greece as collateral for loans to the country’s commercial banks, thus making access to funds more expensive and putting pressure on the country to reach new reforms.
Banks must now pay as much as 1.55 percent interest from the Greek central bank’s emergency liquidity assistance (ELA) programme, as opposed to 0.05 percent on regular ECB financing, according to Greek newspaper Kathimerini.
This could fuel uncertainty surrounding whether or not Greece can reach an agreement on its bailout programme.
“I said yesterday that all things economic can change in the blink of an eye and today was a good example of this. It was also a good example of sticking to range trading, as any sustained move is just not on the cards at the moment,” Marex Spectron’s David Govett said.
Still, markets should for now remain fairly subdued ahead of the blockbuster US non-farm payrolls data on Friday, which will be scrutinised for clues as to when the US may choose to raise interest rates.
Non-farm payrolls are expected at 236,000 while the unemployment rate is expected to stay steady at 5.6 percent.
Elsewhere, the European Commission upgraded its growth forecasts for the bloc, claiming that low oil prices, aggressive monetary policy measures and a declining euro will ultimately buoy the economy from its slide into recession.
The eurozone will grow by 1.3 percent this year and 1.9 percent in 2016, it predicted, having three months ago lowered its forecasts to 1.1 percent this year and 1.7 percent in 2016.
In data, German factory orders at 4.2 percent beat forecasts while the EU retail PMI at 46.6 was largely in line. Weekly unemployment claims, preliminary non-farm productivity, labour costs data and the trade balance are due from the US later.
(Editing by Mark Shaw)
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