Gold and silver fell as the dollar strengthened for the first time this week and investors speculated that cheap oil prices will keep inflation in check.
Data from the European Central Bank showed its second round of long-term loans came in at the low end of analysts’ estimates, bolstering the case for the institution to start large-scale quantitative easing. Oil traded near a five-year low as Saudi Arabia questioned the need to cut output.
“Gold has to contend with lower oil prices, but the key risk remains the resumption of a dollar rally as investors wait for the Fed’s next move,” said Xia Yingying, a Hangzhou, China- based analyst at Nanhua Futures Co.
Gold for February delivery on the Comex slipped 0.4 percent to $1,224 an ounce by 8:13 a.m. in New York. The metal for immediate delivery fell 0.2 percent to $1,223.40.
Holdings in gold exchange-traded products have risen for the past two days, rebounding from a five-year low. Assets increased 2.7 metric tons to 1,612.5 tons as of yesterday, data compiled by Bloomberg show.
Fed officials will meet next week to debate the timing of the first interest-rate increase since 2006. The Bloomberg Dollar Spot Index rose 0.2 percent.
The ECB said it allotted 130 billion euros ($161 billion) to euro-area banks at a fixed interest rate of 0.15 percent in its targeted longer-term refinancing operation. The median estimates from a Bloomberg News was 148 billion euros. The less banks borrow, the more policy makers must find other ways to boost the balance sheet.
Silver for March delivery on the Comex fell 0.4 percent to $17.115 an ounce, having slipped as much as 1.4 percent earlier today. Platinum futures declined 0.3 percent to $1,239.10 an ounce, while palladium for March delivery on the Nymex slipped 0.6 percent to $816.80 an ounce.