Gold declines for third day as ECB rate cut strengthens dollar

Singapore - Gold fell for a third day as the dollar strengthened after the European Central Bank cut interest rates and expanded its quantitative-easing plan.

Bullion for immediate delivery lost 0.7% to $1,245.12 an ounce by 12:54 p.m. in London, according to Bloomberg generic pricing. The price has fallen 1.8% in the past three days after closing on Monday at the highest in a year.

Gold is still up 17% this year as demand for a haven surged with volatility in financial markets. The ECB cut all its main rates on Thursday as policy makers strive to fend off the threat of euro-area deflation. A stronger dollar can cut demand for the metal as an alternative investment.

“More QE out of the ECB would weaken the euro, strengthen the dollar and weigh on gold,” John Meyer, an analyst at SP Angel Corporate Finance in London, said before the announcement.

Investors began building stocks in exchange-traded funds backed by gold again, with holdings rising 4.1 metric tons on Wednesday after falling 1.1 tons the day before.

The total stood at 1 728.1 tons, the highest level since August 2014 after climbing in all but six days this year, according to data compiled by Bloomberg as of Wednesday.