Gold dips after ECB decision; awaits UK poll, Comey details

By Eric Onstad

LONDON (Reuters) - Gold edged lower on Thursday after the euro lost ground against the dollar, but the move was modest as investors awaited the outcome of Britain's national election and the testimony from former U.S. FBI director James Comey.

The euro declined after the European Central Bank said it would keep money taps fully open and repeated interest rates would stay at record lows.

A weaker euro versus the dollar erodes the buying power of euro zone investors for gold, priced in the U.S. currency.

Spot gold was down 0.4 percent at $1,281.61 per ounce at 1240 GMT.

U.S. gold futures for August delivery dipped 0.7 percent to $1,284.50 an ounce.

 

The ECB decision was largely in line with expectations and many investors were holding fire ahead of British election results and Comey's testimony, which will turn the spotlight on a clash between him and U.S. President Donald Trump.

Those and other uncertainties are providing good support to gold, which is likely to eventually resume its rally even if it extends its correction lower in the short term, said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

"We are well and truly stuck in a wait-and-see mode. That's following a buying spree over the past week, so it's quite natural that we see markets taper off some of the recent gains," he said.

"The sentiment on the market at the moment is that gold is a buy on dips. The question is whether we'll see a dip of any size once there's more clarity following today's events."

Hansen advised buying if gold declined to key short-term support at $1,265.

UBS strategist Joni Teves agreed that a growing list of global uncertainties along with macro forces are expected to push gold higher so any dips would be an opportunity to build or add to positions.

"We think that investor allocations to gold remain small compared with other assets. An extension of gold's gains up ahead raises the risk that many would have to play catch-up," she said in a note.

In other precious metals, palladium climbed 1.8 percent to $848.90 an ounce. In the previous session, it hit the highest in nearly three years, but shed its early gains to end 2.3 percent lower.

Platinum gained 0.3 percent to $945.10 per ounce while silver rose 0.5 percent to $17.63.

(Additional reporting by Vijaykumar Vedala and Koustav Samanta in Bengaluru. Editing by Jane Merriman and David Evans)