Gold rose for a second day on Thursday as the drop to near 2-1-2-month low encouraged some physical buying, ahead of today’s monetary decision by the European Central Bank.
The yellow metal continued to find support after hitting a bottom of $1261.20 an ounce on September 3, as the dollar climbed to a 14-month high versus a basket of major currencies.
The attention will shift later in the day to the ECB policy decision amid expectations of seeing adoption of new stimulus measures to bolster recovery and stave off low inflation.
Any announcement of QE measures by the ECB may help gold price to resumed its rebound.
Also, eyes will focus on the awaited nonfarm payrolls on Friday, as investors know that it is the key determinant to any change in the Fed’s monetary policy.
The most recent reports showed improvement in U.S. data has raised speculations the Fed would raise interest rates sooner than predicted.
On the political front, the pace of tensions may ease in Ukraine as both Russia and Ukraine agreed on the steps needed for a truce.
“The Kremlin said on Wednesday President Vladimir Putin and Ukrainian leader Petro Poroshenko had agreed on steps towards peace in eastern Ukraine, even though a ceasefire had not been agreed between Moscow and Kiev because Russia is not a party to the conflict,” Reuters said.
Gold is currently trading around $1269.78 after hitting a high of $1273.27 and a low of $1268.16.
Some investors preferred to buy the metal as the 14-day relative strength index retreated to a three-month low of 33.6 on Tuesday, providing some evidence prices may rebound.
Crude oil for October’s delivery retreated to trade around $94.72 after hitting a bottom of $92.64.