Gold News

ECB Won't Buy Gold, Says Draghi, But 2015 QE "Boosting Prices" Despite Strong Dollar & Falling Oil

BUY GOLD prices shot $10 per ounce higher Thursday lunchtime in London as the European Central Bank laid out more plans for QE asset purchases after voting to keep its current policy on hold for another month.
 
With gold touching $1213 per ounce as ECB president Mario Draghi began his monthly press conference, the Euro currency sank to new 2-year lows against the Dollar on the FX market.
 
Draghi then said the monetary policy team had this week discussed buying "all assets except gold" – qualifying a claim by fellow member Yves Mersch last week that gold bullion could be included.
 
Prices to buy gold in Euros then reversed their 0.6% pop to new 4-months highs, trading back at €974 per ounce as the single currency rallied and the Dax index of German-listed equities hit fresh all-time record highs.
 
Gold priced in Dollars eased back to $1205 per ounce,  but silver held onto more of its spike near $16.60.
 
"Despite a still appreciating US Dollar," wrote analysts at Germany's Commerzbank this morning, "the gold price is looking relatively robust at present."
 
While the ECB has again delayed launching outright QE money creation to buy Eurozone assets, "anticipation that this will happen in the first quarter of 2015," the bank's commodities team says, "is likely to lend further buoyancy to the gold price in Euros."
 
What the Financial Times today calls "extreme oil bears" have meantime taken the US Comex option contracts to sell crude oil at $40 a barrel by December 2015 to the equivalent of 880,000 barrels, "more than quadrupling in the past two weeks."
 
US crude oil prices fell 0.5% on Thursday, dropping back below $67 per barrel after bouncing from last Friday's new 5-year lows.
 
"A lot of the downside in the gold price" in Asian trade Monday," reckons Mitsui strategist David Jollie, speaking to CNBC Africa, "was probably to do with the oil price falling at the end of last week, rather than the failure of the Swiss gold initiative."
 
Longer term, however, falling oil prices will mean lower inflation, says Jollie, leading to "loose monetary policy for a lot longer [which] might lead to more inflation [and] more reason to want to buy gold."
 
For now, "[Monday's] nasty bounce off November 28th's low of $1144 seems to have the market in buy dips mode," says a technical note from ScotiaMocatta.
 
"The big picture is encouraging."
 
Still forecasting a drop to $1100 or below within the next 1-3 months however, techncial analysts at Societe Generale believe prices to buy gold this week "hit the resistance line in force since last July" – now at $1223 – "and should stage a pullback."

Adrian Ash is director of research at BullionVault, the physical gold and silver market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and is now a regular contributor to many leading analysis sites including Forbes and a regular guest on BBC national and international radio and television news. Adrian's views on the gold market have been sought by the Financial Times and Economist magazine in London; CNBC, Bloomberg and TheStreet.com in New York; Germany's Der Stern; Italy's Il Sole 24 Ore, and many other respected finance publications.

See the full archive of Adrian Ash articles on GoldNews.

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