Gold Steadies as Europe’s Energy Woes See Greenback Strengthen
Gold was steady, as mounting concerns over a worsening energy crisis in Europe drove investors to the greenback over the euro.
(Bloomberg) -- Gold was steady, as mounting concerns over a worsening energy crisis in Europe drove investors to the greenback over the euro.
Bullion climbed Friday to pare a third straight weekly drop after a US jobs report showed employers added a healthy number of jobs in August and a steady stream of people entering the workforce lifted the unemployment rate. This suggested some easing in the tight labor market and offered mixed implications for the Federal Reserve’s monetary policy tightening path.
Central banks globally are set to keep raising interest rates to fight inflation, weighing on non-yielding assets like gold. There are growing expectations for the European Central Bank to hike by 75 basis points as soon as Thursday, but the decision remains a challenging one as chief Christine Lagarde and her colleagues manage the twin problems of high price pressures and an impending recession.
Europe’s energy crunch is intensifying as Gazprom PJSC last week again halted its key gas pipeline indefinitely after Group of Seven leaders agreed to implement a price cap on Russian oil as the Kremlin continues its war in Ukraine. Germany -- the nation most affected by the Nord Stream pipeline cutoff -- unveiled a $65 billion package to protect consumers.
“The general outlook for gold remains weak with market players positioning for the ECB meeting this week,” said Ravindra Rao, head of commodity research at Kotak Securities Ltd. While a firm dollar and weak investor interest weigh on gold, Europe’s power crisis, China’s virus outbreak and renewed US-China tensions could lend some support to the precious metal, he said.
On Friday, European ministers will discuss special measures to rein in soaring energy costs, from gas-price caps to a suspension of power derivatives trading. The euro fell 0.5% on Monday.
Spot gold was flat at $1,713.37 an ounce as of 5:39 a.m. in London, after rising 0.9% on Friday. The Bloomberg Dollar Spot Index advanced 0.3%. Silver and platinum steadied, while palladium traded higher.
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