Gold Retreats On BoJ's Heavy Monetary Expansion, Focus On ECB And BOE

Gold prices advanced during the Asian session on Thursday trading, after the BOJannounced aggressive easing to boost growth, ahead of the European Central Bank and the Bank of England`s key interest rate decisions.

The BoJ took strong easing steps earlier in the session, announcing a heavy monetary expansion campaign. In response, gold rallied as the money printing by central banks will provoke a purchase of the precious metal as a hedge against inflation.

- as of 3:01 EST, Gold fell 0.45 percent or 7.09 points to trade at 1,553.30

Among other precious metals:

Silver rose 0.40% to trade around 26.99

Platinum lost 0.84% to 1,528.50

Palladium came lower by 0.69% to 750.60

The BoJ decided to keep the nation’s benchmark interest rate at zero levels between 0.0% and 0.10% for another round amid the recent economic environment.

However, The BoJ said it will conduct money-market operations so that the monetary base will increase at an annual pace of about 60 to 70 trillion yen. The BoJ also said it would extend the maturity of bonds it holds to around 7 years from the current 3 years.

The dollar jumped higher against the Japanese yen after it came under pressure in the overnight trading on disappointing private sector jobs data, promoting investors to lower their expectations for Friday`s payrolls data.

The dollar index hovered around 83.13 after opening at 82.75, USDIX hit a high of 83.14 and a low of 82.69.

Gold traders will closely watch ECB and BOE, where a looser monetary policies would support gold`s rally. Investors fearing higher inflation resulting from such policies resort to bullions as a hedge against inflation. However, neither central bank is expected to deliver any new stimulus for now.

The ECB is expected to hold interest rates steady later on Thursday, but could provide a dovish outlook on its monetary stance. The Bank of England (BOE) is also unlikely to provide fresh easing at its meeting later in the session.

As of 09:37(GMT+2), the euro traded at $1.2829 after opening at $1.2847. The EUR/USD pair set an intraday high of $1.2852 and a low of $1.2820.