Investing.com - Gold edged lower in European trade on Thursday, as market players looked ahead to the Bank of England's monetary policy decision later in the session.
Gold for August delivery on the Comex division of the New York Mercantile Exchange slumped $11.05, or 0.82%, to trade at $1,332.55 a troy ounce by 07:06GMT, or 3:06AM ET.
A day earlier, gold tacked on $8.30, or 0.62%, as investors assessed the possibility of more monetary easing by global central banks.
The Bank of England makes its policy announcement at 11:00GMT, or 07:00AM ET, on Thursday, with some players expecting a rate cut.
Expectations for more easing mounted after BoE Governor Mark Carney recently suggested interest rate cuts and additional stimulus will likely be needed over the summer to offset the hit to the economy from Britain's decision to leave the European Union.
Meanwhile, in Japan, Prime Minister Shinzo Abe flagged a fresh fiscal stimulus package after the ruling coalition won a landslide victory in an election for parliament's Upper House. The coalition’s firmer grip means policy makers can more easily approve a bigger fiscal stimulus package this autumn to spur the economy.
Elsewhere, the European Central Bank is also widely expected to take a dovish stance when it holds its policy review next week.
Expectations of monetary stimulus tend to benefit gold, as the metal is seen as a safe store of value and inflation hedge.
Market participants are also betting that the Federal Reserve would hold off on raising borrowing costs this year, despite last week's upbeat U.S. jobs report. Interest rate futures are currently pricing in a 33% of a rate hike by December.
The precious metal is sensitive to moves in U.S. rates. A gradual path to higher rates is seen as less of a threat to gold prices than a swift series of increases.
The precious surged to a more than two-year high of $1,377.50 last week, as fears surrounding global growth in wake of Britain’s vote to exit the European Union sent investors flooding into safe haven assets.
However, uncertainty over the U.K.'s political scene diminished after Theresa May was appointed as U.K. prime minister on Wednesday, replacing David Cameron who resigned after the Brexit vote last month. It remains unclear though when Article 50, which initiates the withdrawal process from the EU, will be triggered.
Prices of the yellow metal are up nearly 27% so far this year amid fading expectations of a Fed rate hike and as expectations mounted that central banks around the world will step up monetary stimulus to counteract the negative economic shock from the Brexit vote.
Also on the Comex, silver futures for September delivery shed 9.1 cents, or 0.41%, to trade at $20.32 a troy ounce during morning hours in London, while copper futures advanced 1.6 cents, or 0.71%, to $2.256 a pound.