Gold slides as dollar jumps against euro on ECB headlines

Investing.com - Gold prices pushed lower in North American trade on Wednesday, falling to the lowest levels of the session as the U.S. dollar jumped against the euro following reports that the European Central Bank is preparing to cut its inflation forecast.

Comex gold futures were at $1,291.98 a troy ounce by 7:05AM ET (1105GMT), down $5.50, or around 0.4%. Meanwhile, spot gold was at $1,289.36.

Gold prices scored a third-straight session of gains Tuesday after hitting its highest level since November 9 at $1,298.80, as investors sought safe-haven assets ahead of potentially market-moving events later this week.

Also on the Comex, silver futures slumped 16.9 cents, or about 1%, to $17.54 a troy ounce. It rose to $17.74 in the prior session, a level not seen since April 25.

The euro hit intraday lows as a report surfaced that the ECB will cut its inflation forecast through 2019 because of weaker energy prices, according to officials familiar with the matter.

A downgrade to the inflation outlook would support the view of top policymakers, including President Mario Draghi, that they must be extremely cautious in communicating and implementing any exit from monetary stimulus.

The report sparked speculation that the euro area monetary authority will maintain its dovish stance. The ECB will release its official updated projections at the monetary policy announcement on Thursday.

The euro sold off as the news hit the wires, hitting an intraday low of 1.1206 against the dollar.

The dollar index, which tracks the greenback against a basket of six major rivals, was up 0.4% at 96.91 in New York morning trade. It fell to 96.46 on Tuesday, the weakest level since November 9.

Meanwhile, market players are looking ahead to former FBI director James Comey's testimony before the Senate Intelligence Committee on Thursday.

Investors are fearful that the Trump administration may be further damaged by any revelations that could emerge when Comey testifies about Russia’s alleged involvement in the U.S. election.

Traders were also wary ahead of Britain's general election, which is also set for Thursday. While pollsters still expect British Prime Minister Theresa May will win the most seats in the election, a tight result could throw the country into political deadlock just days before formal Brexit talks with the European Union are due to begin on June 19.

Elsewhere in metals trading, platinum ticked down 0.8% to $955.85, while palladium sank 2.1% to $830.75 an ounce.

Copper futures slumped 0.8 cents to $2.539 a pound.