Gold trades lower, but trims losses after ‘dovish’ ECB rate hike

Gold prices traded lower on Thursday, but pared their losses following an interest-rate hike and statement from the European Central Bank. Investors also digested some fresh U.S. inflation data.

Price action

Gold futures for December delivery
GCZ23,
-0.35%
ndeclined by $1.20, or 0.1%, to $1,931 per ounce on Comex. On Wednesday, the most-active contract marked its lowest finish since Aug. 22, according to Dow Jones Market Data.
Silver futures for December
SIZ23,
-1.64%
shed 27 cents, or 1.1%, to $22.92 per ounce.
Platinum for October delivery gained $1.10, or 0.1%, to $906 per ounce, while palladium for December delivery
PLV23,
+0.29%
rose by $2.70, or 0.2%, to $1,263 per ounce.
Copper for December delivery
HGZ23,
+0.25%
rose 3 cents, or 0.8%, to $3.82 per pound.

Market drivers

Traders described the ECB’s 25 basis point interest rate hike on Thursday as “dovish,” potentially boosting the appeal of gold by suggesting that global bond yields may not need to rise much higher.

“The ECB hiked rates 25bps today, taking the deposit rate to 4.00% in what can only be characterised as a dovish hike,” said a team of macro analysts at TD Securities,” the team said.

“This is a clear sign that absent any further notable upside surprises to inflation and its drivers, they are done hiking rates.”

The U.S. dollar also caught a boost from the ECB hike as the euro fell. The ICE U.S. Dollar Index was up 0.2% at 104.93.

In U.S. economic data U.S. August retail sales and wholesale producer prices were released Thursday morning. Retail sales in the U.S. rose 0.6% in August, while the producer-price index, a gauge of wholesale-price growth, rose 0.7%.

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