Gold traded in a tight range on Wednesday as investors remain neutral amid lack of fresh catalyst ahead of ECB and the BOE’s key interest rate decisions, while platinum and palladium rose significantly amid fears of supply deficit.
Gold is trading sideways over six consecutive sessions between $1660.00 and $1680.00 levels, while investors shifted their attention to the equity markets.
The European Central Bank (ECB) will announce key interest rate decision on Thursday, ECB is expected to leave the benchmark interest rate at its record low of 0.75 percent.
The Bank of England`s (BOE) interest-setting monetary policy committee is due to announce its monthly decision as well, where the its expected maintain its interest rate at 0.50 percent, and bond-purchase program steady at its record high of €375 billion.
Gold retreated to currently trade at $1672.34 per ounce after reaching a session high of $1674.95 and low of $1671.08.
Both platinum and palladium have outperformed gold on an improving economic outlook, as solid euro zone data eased worries of potential political turmoil in Spain and Italy.
In Spain, corruption allegations against the Prime Minister, Mariano Rajoy and some of the ruling party members sparked a wave of uncertainty among investors.
While fears persisted in Italy ahead of February’s general elections, where pre-election polls showed that the former Silvio Berlusconi is gaining ground and his party was edging closer to become the front-runner.
Platinum rose to its strongest level in four months in Asia on Wednesday on concern that global supply is declining, while demand is rising after mining disruptions in South Africa as well as the drop in supply from Russia triggered fears of a supply deficit.
Platinum rose to trade around $1709.50 an ounce after recording $1716.75 an ounce.
While Sister-metal palladium held near its highest since September 2011 on growing hopes that global economy was on the way to recovery and economic sentiment started to favor industrial metals.
Palladium prices retreated slightly to record $761.50 an ounce after recording its highest yesterday at levels of $767.75 an ounce.
Supplies from mines in South Africa, which accounts for almost 73% of the global production, are expected to drop. Anglo American Platinum, the world`s largest producer of the precious metal intends to halt four mines, which will cause a reduction in the size of global output by 7 percent.