Gold Swings Between Gains and Losses Before ECB Decision

Gold fell in New York as the U.S. dollar strengthened the most since March 9 after the European Central Bank cut interest rates to a record low. Policy makers meeting in Frankfurt today lowered the ECB’s main refinancing rate to 0.75 percent from 1 percent, as predicted by 49 of 64 economists in a Bloomberg News survey. China cut benchmark interest rates for the second time in a month and allowed banks to offer bigger discounts on their lending costs, while Bank of England restarted bond purchases two months after halting its expansion of stimulus as the deteriorating outlook spurred policy makers to ramp up efforts to kick start a recovery. “On paper this is gold-supportive but the stronger dollar is creating headwinds,” Ole Hansen, head of commodity strategy at Saxo Bank A/S in Copenhagen, said by e-mail today. August-delivery bullion fell 1.1 percent, the most since June 28, to $1,604.50 an ounce by 8:30 a.m. on the Comex in New York. Gold for immediate delivery was down 0.7 at $1,604.88 an ounce in London. The U.S. Dollar Index, a gauge against a six-currency basket that includes the euro, climbed as much as 1.1 percent. Gold usually trades counter to the dollar. Bullion denominated in euros rose as much as 0.8 percent to 1,300.72 euros ($1,618) an ounce, the highest since June 6. “Central banks’ cutting rates and providing stimulus, whether through quantitative easing or rate cuts, is positive for gold on a longer-term basis,” Walter de Wet, the head of commodities research at Standard Bank Plc, said by telephone from Johannesburg. “With lower interest rates comes greater liquidity, which is also positive for gold.” Silver for September delivery fell 1.5 percent to $27.855 an ounce. Platinum for October delivery lost 1 percent to $1,476.40 an ounce. Palladium for September delivery declined 1.2 percent to $591.45 an ounce.