Gold held firm above $1,250 an ounce Monday, buoyed by the European Central Bank’s decision to unveil fresh stimulus measures. Meanwhile, U.S. jobs data released Friday disappointed some market expectations for a more robust reading.
Rallies in equities markets will likely curb the metal`s appeal as an investment hedge.
Spot gold was trading higher at $1,254.49 up 0.27 percent or 3.39 points compared with a session opening at $1,252.99. Gold so far hit a session high at $1,255.40.
At last, the European Central Bank decided to act and fresh action was delivered by President Mario Draghi who decided to cut the main refinancing rate in the euro-area to a record low 0.15 percent and imposed negative deposit rates on commercial lenders, in a bid to stimulate lending to businesses.
European markets were happy post the ECB move, where stocks advanced and low-rated Eurozone bond yields hit record lows. Asian stocks touched their highest levels in nearly three years today, tracking record close on Wall Street after bright U.S. jobs data.
Gold, often seen as an investment hedge, has a negative co-relation with equities and the dollar.
Friday data showed that U.S. employment returned to its pre-recession peak in May, with a solid pace of hiring adding to signs of the apparent traction of the U.S. economy. Data indicated that the Federal Reserve is likely to stick to the current pace of reductions to its asset purchase program.
The Department of Labor reported that the U.S. economy added 217,000 jobs last month, just under expectations for jobs growth of 218,000. While unemployment rate remained steady at a five-and-a-half year low of 6.3%.
Platinum, Palladium Post Gains
Among other precious metals, Platinum gained for a fourth straight session as investors awaited the outcome of wage negotiations in top producer South Africa. As of 3:54 EST, spot Platinum added 0.14 percent or 2.00 points to trade at 1,452.75.
Palladium, of which South Africa is the second biggest producer, edged up 0.25 percent or 2.10 points to trade near August 2011 highs at 845.50.