Business

Gold prices rise, but strong dollar curbs gains

March 05, 2015 11:52 AM

Gold edged above $1,200 an ounce on Thursday as equities weakened, but the safe-haven metal retained most of its losses from a three-day decline on robust U.S. economic data and strength in the dollar.

FUNDAMENTALS

* Spot gold had ticked up 0.3 percent to $1,202.65 an ounce by 0035 GMT, after losing 1 percent in the last three sessions.

* The metal fell on Wednesday after data showed U.S. private employers added 212,000 private-sector jobs in February. Separately, the Institute for Supply Management said its services index was 56.9 in February, up slightly from 56.7 in January.

* The data pushed the dollar to a fresh 11-1/2 year high on Wednesday.

* A robust economy decreases the appeal of bullion, often seen as an alternative investment during times of economic and geopolitical uncertainty. A stronger dollar makes gold more expensive for holders of other currencies.

* Investors are now waiting for U.S. nonfarm payrolls data on Friday for more clues about the economy.

* The data is also being eyed to see how it could impact the timing of the Federal Reserve's move to hike interest rates. Higher rates could dent demand for non-interest-bearing assets such as gold.

* On Thursday, traders will be watching the European Central Bank's policy meet. The ECB, which starts its quantitative easing, or bond-buying, programme of more than 1 trillion euros this month, is expected to detail the plan after the meeting.

* The London Bullion Market Association believes the gold industry is ready for wholesale reform, including a tailor-made mechanism to report daily turnover and potential clearing following 2014's shake-up of benchmarks.

MARKET NEWS

* Asian stocks slipped on Thursday after Wall Street continued to pull back from record highs ahead of Friday's closely-watched U.S. jobs data, while the nervous euro languished at an 11-year low prior to the ECB meeting.
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