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· Gold prices eased on Thursday as the U.S. dollar hovered near multi-week highs, while some investors locked in profits ahead of major central bank meetings this month.

The European Central Bank is meeting later in the day, followed by the U.S. Federal Reserve next Tuesday-Wednesday.

Spot gold was down 0.2% at $1,422.80 per ounce, as of 0303 GMT. U.S. gold futures were down 0.1% at $1,422.90.

· “From last three days, gold prices have been range-bound. Some money managers are starting to shut some positions to prepare for the Fed meeting, and also the ECB decision coming out today,” said Benjamin Lu, analyst, Phillip Futures.

“Before the key events happen, people like to take in some profits because nobody knows what is going to happen. Some might capitalize on volatility to push prices slightly lower and buy back after the dip. Overall, on the long-term we are still bullish on gold,” Lu added.

· Weighing down gold prices, the U.S. dollar edged near a two-month high against a basket of major currencies on Thursday. A stronger dollar makes gold costlier for holders of other currencies.

· Investor focus shifted to the ECB meeting due later in the day and a widely expected interest rate cut from the Fed next week, which are expected to dictate the tempo for currencies and bond yields in coming months.

Further boosting hopes of lower interest rates, a series of purchasing manager index (PMI) readings in the United States and Europe on Wednesday came in weaker than expected.

In the United States, data showed manufacturing activity slowed to a 10-year low in early July with production volumes and purchases falling.

· Gold prices have climbed more than 12% or $150, since touching its 2019 low of $1,265.85 in early May, driven by dovish outlook from major central banks, signs of the U.S. economy losing steam and an escalation in tensions in the Middle East.

· “The gold rally will be vulnerable to the rhetoric of central banks, as their actions have for the most part been priced into the asset,” Alfonso Esparza, a senior market analyst at OANDA, said in a note.

· Meanwhile, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, dropped 0.11% to 822.25 tonnes on Wednesday from Tuesday.

· Spot gold remains neutral in a narrow range of $1,412-$1,427 per ounce, according to Reuters technical analyst Wang Tao.

· Gold holds the rising support line having been capped by 2.618% Fibo extension

Gold prices are firm in the $1425s / $1426s in early Asia with plenty of geopolitical risks providing a cushion for bulls on downside corrections. Indeed, the yellow metal was fairly strong overnight as the USD and rates weakened - Gold prices ended the New York session bid, higher by 0.42% at 1423 while closing below the highs of the day that were marked at 1429.52 on a spot basis. Gold futures also ended higher, taking cues from negative data across the macro arena, nailing down expectation of a new easing cycle at the central banks, August gold on Comex gained $1.90, or 0.1%, to settle at $1,423.60 an ounce, well off the highs for the session of $1,430. Prices declined by 0.4% on Tuesday.

Besides trade wars and Iran, North Korea has placed itself firmly back on the risk radar. In recent trade, there has been news that two unidentified projectiles were fired into the East Sea as North Korea gets frustrated by lack of progress in talks with the US. The launch appears to resemble the May 2019 firing of two short-range missiles, which travelled approximately 260 miles and was fired from the Wonson area.

Gold levels

Gold prices have fallen through the 50% Fibo retracement of the June/July triple bottom swing lows and the recent swing highs range. This is located at 1417, just below the session low of 1416. The next target comes as 1400. We have a confluence of Fibos lining up at 1398 ahead of 1382 swing lows. Below there, the 1,373/76 zone comes into play which meets the 19th June spike correction lows. On the upside, 1440and 1450s are targets.

· Silver dropped 0.6% to $16.49 per ounce, after hitting over a one-year high of $16.64 in the previous session.

Platinum rose 0.3% to $878.21 an ounce, its highest since May 7, while palladium edged up 0.1% to $1,541.07, after touching a one-week high earlier in the session.

Reference: Reuters, Daily FX