Gold has rebounded by more than one per cent as the euro bounced back from a six-week low against the US dollar after European Central Bank chief Mario Draghi indicated further interest rate cuts in the euro zone are unlikely.
At the weekend, China will report data on industrial production and retail sales.
That sent spot gold to a low of $US1,237.06 an ounce, but by 2.46 pm EST (0646 Friday AEDT) it had gained 1.4 per cent to $US1,270.10.
The ECB dropped its main refinancing rate to zero on Thursday, from 0.05 per cent, while expanding its quantitative easing asset-buying program to 80 billion euros ($A120.38 billion) a month, from 60 billion euros, and cutting its deposit rate to -0.4 per cent from -0.3 percent.
That initially sent the euro sharply lower, but the currency recovered to a three-week high against the US dollar after Draghi said the bank did not expect that it would be necessary to cut rates further.
Global stock markets fell, another supportive factor for gold prices, traders said.
"The attention now turns to what the Fed is going to do next week. Looking at the Fed futures market now, the money seems to be on a September rate rise, which is quite a change from a couple of weeks ago."
On Wednesday, holdings of the world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares, resumed their upward trend after a brief hiatus.
"The open and close of yesterday is contained within the open and close of today, so that's a bullish scenario. This suggests a little more strength here," said Eli Tesfaye, senior market strategist for brokerage RJO Futures in Chicago, adding that the market is eyeing $US1,300.
"The violence with which this market is rallying suggests the momentum is with the bulls right now."
Gold prices were solidly higher and poised to close at or near a 13-month high close in late U.S. trading Thursday. Safe-haven demand surfaced as U.S. stock indexes sold off and the U.S. dollar index dropped sharply in the wake of today’s announcement of the monetary policy easing measures from the European Central Bank. April Comex gold was last up $15.10 at $1,272.60 an ounce. May Comex silver was last up $0.214 at $15.58 an ounce.
Technically, April gold futures prices closed nearer the session high and scored a bullish “outside day” up on the daily bar chart today. Prices are in a nearly three-month-old uptrend on the daily bar chart and bulls have the solid overall near-term technical advantage. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,300.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at today’s low of 1,237.50. First resistance is seen at last week’s high of $1,280.70 and then at $1,290.00. First support is seen at $1,260.00 and then at $1,250.00. Wyckoff’s Market Rating: 8.0
Reference: Businessnews, Kitco
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