Gold steadied near a one-week high on Thursday as the dollar weakened, but the yellow metal traded in a narrow $8 range as investors held large bets ahead of the European Central Bank’s monetary policy decision due later in the day.
Spot gold was flat at $1,946.25 per ounce by 0511 GMT, after hitting its highest since Sept. 3 at $1,950.51 on Wednesday.
U.S. gold futures were steady at $1,954.90.
“The U.S. dollar is a bit lower, stocks bounced a bit and that essentially carried over to gold as well,” said DailyFx currency strategist Ilya Spivak.
Asian stock markets snapped their longest losing streak since February following a bounce on Wall Street, while the dollar index slipped from four-week highs, making gold less expensive for holders of other currencies.
Spivak said investors in gold may also be waiting for U.S. CPI data and the Federal Reserve’s two-day meeting next week, in addition to ECB’s announcement which is a key risk event.
The ECB is all but certain to keep policy unchanged when it announces its decision at 1145 GMT, which will then be followed by a news conference by President Christine Lagarde.
Major central banks have rolled out unprecedented stimulus measures and kept interest rates low, driving gold to new highs because of its role as a hedge against inflation and currency debasement.
“Ample money supply, lower interest rates and macro uncertainty should support gold investment,” ANZ analysts said in a note. “Physical demand is recovering, so we see the gold price reaching $2,300/oz next year.”
On the technical front, spot gold may rise more to $1,965 per ounce, as suggested by a projection analysis and a falling channel, said Reuters technical analyst Wang Tao.
Elsewhere, silver was steady at $27.02 per ounce, platinum little changed at $916.18 and palladium gained 1% to $2,294.42.
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