Gold Under Pressure As ECB In No Hurry To Raise Interest Rates
(Kitco News)- Gold is under renewed sellingpressure Thursday, trading near session lows as the European Central Bankindicates that it is in no hurry to raise interest rates within the next year.
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| Photo courtesy of the ECB: Mario Draghi, ECB President |
The gold market continues to feelthe effects of a stronger U.S. dollar, particularly against the euro after ECBPresident Mario Draghi said that the central bank’s governing committee doesn’texpect to raise interest rates until at least through the summer of 2019.
At the same time though, Draghialso said in his opening statement that the committee expect to start cuttingback its bond-purchasing program in September and end the program in December.
August gold futures last tradedat $1,228.4 an ounce, down 0.27% on the day. Gold prices continue to remain belowcritical resistance, hovering above last week’s 12-month low. At the same time,the U.S. dollar index hangs around a one-year high, last trading at 94.43points. The euro has a heavy weighting in the U.S. dollar index.
While Draghi was relativelyoptimistic on the eurozone economy, he added that there is still need forsignificant monetary policy stimulus.
Draghi noted that while inflationhas pushed higher in recent months, it still isn’t on a consistent path higher.He added, “It is too early to declare victory.”
He commented that euro-areaeconomic growth is “solid and broad-based.” However, he also highlightedgrowing risks to growth.
“The risks surrounding the euro-areagrowth outlook can still be assessed as broadly balanced,” he said in hisopening statement. “Uncertainties related to global factors, notably the threatof protectionism, remain prominent. Moreover, the risk of persistent heightenedfinancial market volatility continues to warrant monitoring.”
Draghi also acknowledged therecent drop in trade tensions following a meeting between European Commission PresidentJean-Claude Juncker and U.S. President Donald Trump. However, Draghi added thatit is still too early to determine what impact the recent talks will have onthe European Economy.
“It’s a good sign and it shows that there is awillingness to discuss trade issues,” he said.
For Kitco News
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