Stronger dollar weighs on gold ahead of ECB meeting

Category: Commodities

Gold futures were lower in European trade on Wednesday, as the dollar strengthened against the euro amid expectations the European Central Bank will almost certainly ease monetary policy this week.The dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.2% to 97.36 during European morning hours, bouncing off the prior session’s more than two-week low of 96.88.The euro fell to 1.0962 against the greenback after climbing to 1.1057 on Tuesday as the ECB is widely expected to cut rates further into negative territory at the conclusion of its monetary policy review on Thursday.The bank is also expected to enlarge its asset purchasing program in a bid to combat persistently low levels of inflation in the euro area.Gold for April delivery on the Comex division of the New York Mercantile Exchange shed $5.30, or 0.42%, to trade at $1,257.60 a troy ounce by 09:00GMT, or 4:00AM ET. A day earlier, gold rallied to $1,279.00 before turning lower to end at $1,262.90, down $1.10, or 0.09%.Prices of the yellow metal have been well-supported in recent weeks amid growing speculation the Federal Reserve will not raise interest rates as soon as next week's policy meeting.Gold hit a 13-month high of $1,280.70 last Friday, after U.S. employment data showed strong jobs growth combined with low wages, prompting investors to scale back expectations on how fast and how far the Fed might raise rates this year.Prices of the yellow metal are up nearly 18% so far this year as investors seek safe havens in the face of mounting instability in other financial markets.Also on the Comex, silver futures for March delivery dipped 1.9 cents, or 0.12%, to trade at $15.36 a troy ounce during morning hours in London.Elsewhere in metals trading, copper futures eased up 0.8 cents, or 0.36%, to $2.230 a pound.Prices of the red metal fell nearly 3% on Tuesday as the latest trade figures out of China added to concerns over the health of the world's second-biggest economy.Exports plunged 25.4% from a year earlier in February, far worse than forecasts for a decline of 12.5% and the worst monthly performance since May 2009, while imports dropped 13.8%, compared to expectations for a fall of 10.0%.The Asian nation is the world’s largest copper consumer, accounting for nearly 45% of world consumption.