Gold rebounded above a three-week low and rose 1 percent on Thursday, as the dollar fell and the key stock indexes hovered below record highs after the European Central Bank left key interest rates unchanged. The ECB held rates at record lows as it seeks to revive growth and inflation with cheap credit to the economy. It left the door open to more policy stimulus, highlighting "great" uncertainty and abundant risks to the economic outlook.
"September's meeting has become even more important and expectations will be running sky-high that the bank will do more QE (quantitative easing)," ThinkMarkets chief analyst Naeem Aslam said. Spot gold gained 1.1 percent at $1,329.90 an ounce by 2:14 pm EDT (1814 GMT), after touching $1,310.56, its lowest since June 28. Better-than-expected US jobs data weighed on bullion prices earlier. US gold settled up 0.9 percent at $1,331 per ounce.
"(ECB President Mario) Draghi's musings that 'a public backstop' for non-performing loans 'would be very useful' helped to fuel a smart gold rally as he reminded the market that he remains the watchful global avatar of accommodative policy," said Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York. Palladium, which hit its highest in nearly nine months on Wednesday, was up 2.1 percent at $683.60 an ounce. Spot silver rose for the first time in six sessions, rising 1.9 percent to $19.75 an ounce. Platinum, which hit a two-week low on Wednesday, was up 1.6 percent at $1,096.99.
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