Gold hits 3-week high as ECB comments lift euro

Gold prices climbed to three-week highs at $1,620 an ounce yesterday after European Central Bank President Mario Draghi said the central bank was ready to do whatever it takes to preserve the euro, boosting the single currency versus the dollar. European shares also climbed and German Bund futures fell after ECB President Mario Draghi said the euro was “irreversible”, and that the currecy bloc was much stronger than many acknowledged. Spot gold was up 0.9% at $1,618.34 an ounce at 1111 GMT, while US gold futures for August delivery were up $10.90 an ounce at $1,619.00. The metal posted its biggest one-day rise since late June on Wednesday as the euro rose on speculation the euro-zone’s bailout fund could be given access to central bank money and as weak US data reignited talk of more quantitative easing. “Yesterday’s move above $1,600 an ounce was driven by more positive sentiment towards gold on the back of growing anticipation for QE,” BNP Paribas analyst Anne-Laure Tremblay said. “A move above $1,630 an ounce would be the sign of a more durable upward trend.” Sharper appetite for risk and dollar softness as a result of the comments also boosting buying of other commodities. Speculation the Federal Reserve will unleash another round of monetary easing this year has been the chief support to gold prices in recent months, after a spate of lacklustre US data. Such a move would maintain pressure on long-term interest rates, keeping the opportunity cost of holding gold at rock bottom, and would likely weigh on the dollar, stoking demand for the metal as an alternative store of value. from gulf times.