Gold Wavers as Traders Weigh Monetary Tightening, Economic Data

(Bloomberg) -- Gold fluctuated as investors weighed the path of central banks' monetary tightening and mixed U.S. economic data.

European Central Bank President Christine Lagarde is no longer ruling out an interest-rate hike this year, a pivot toward the tightening stance of global peers that officials privately see materializing with a shift in policy guidance as soon as next month.

The euro jumped in response and the dollar gave up earlier gains to fall for a fourth day. Growth pulled back in the U.S. services sector in January to the slowest pace in nearly a year. Meanwhile, U.S. initial jobless claims fell more than expected last week to 238,000 ahead of Friday's payrolls report.

Bullion has been hovering around $1,800 recently as investors gauged the outlook on the Federal Reserve raising interest rates. Earlier Thursday, it tumbled the most in a week as traders focused on potentially aggressive tightening by the Federal Reserve.

“The short-covering that took place last day or two is done, and markets are now focusing on the risk of more robust Fed tightening” with a 50-basis-point hike being priced in, said Bart Melek, global head of commodity strategy at TD Securities.

On Thursday, the Bank of England lifted its key interest rate as part of measures to contain inflation, with policy makers coming close to an even bigger hike. The European Central Bank left its rates unchanged, in line with expectations. Investors will turn to Friday's employment report from the U.S. Labor Department for clues about the pace of wage inflation.

Spot gold was little changed at $1,806.14 an ounce as of 3:23 p.m. in New York, after climbing 0.9% in the previous three days. The Bloomberg Dollar Spot Index fell 0.3%. Bullion for April delivery slipped 0.3% to settle at $1,804.10 on the Comex. Silverand palladium all declined. Markets in China remain closed for the Lunar New Year holidays.

Base metals were mostly lower, with copper down 0.1% to settle at $9,832.50 a ton on the London Metal Exchange, while zinc fell 0.4%.

Aluminum rose 2.1%, extending gains after United Co. Rusal -- the world's second-biggest producer -- forecast a global deficit in 2022 of 1.6 million to 1.7 million tons, according to BCS Global Markets.