By Tim Clayton
There was choppy trading following the Bank of Japan monetary policy decision with gold able to find support and cling on to overall gains for July as action overall disappointed markets and pushed the dollar weaker.
Gold prices were unable to hold above the $1,340 per ounce level in US trading on Thursday and dipped to lows below $1,335 as precious metals overall moved lower. There was some evidence of month-end positioning, while a solid reading for US jobless claims also curbed potential gold support.
After find support above $1,330, there was a gradual recovery into early Asian trading with the dollar unable to gain any traction against the Euro.
The Bank of Japan announced a near doubling of its exchange trade funds (ETFs) purchases to an annual JPY6.0trn from JPY3.3trn, but decided against more radical measures and there was no move to push interest rates on central bank deposits further into negative territory. The target increase in the monetary base was also held at JPY80trn per annum. The actions increased speculation that the bank had acted on political pressure rather than conviction over the stimulus programme. The bank will also hold a thorough policy assessment at the next review, increasing speculation over a radical overhaul.
Gold spiked lower in an immediate reaction to the decision before recovery ground equally quickly as the dollar also more than surrendered the initial move higher.