Gold News

Gold Prices Edge Back as ECB "Discusses QE", Stocks & Commodities Flat with Euro & Bonds

GOLD PRICES reversed all of yesterday's 1.1% rise by lunchtime Thursday in London, slipping back in terms of all major currencies as Eurozone central bank chief Mario Draghi said the ECB today discussed but decided against quantitative easing at its monthly policy meeting.
 
European stock markets, like the Euro currency, whipped but held unchanged for the day, as did commodities and bonds.
 
Gold prices for Euro investors edged back to €932 per ounce, some 1.1% below last week's finish.
 
Euro gold prices peaked in September 2012 – twelve months after the Dollar price – just as ECB chief Draghi vowed to "do whatever it takes" to defend the single currency union amid the government debt crisis led by Greece, Ireland and Portugal.
 
Today Draghi said the ECB governing council "is unanimous in its commitment to using also unconventional measures [to avoid] a too prolonged period of low inflation."
 
Now with 18 nation-state members, the Eurozone has some 330 million citizens.
 
Eurozone consumer-price inflation fell in February to a 5-year low of 0.5% annually.
 
Pressed by journalists in the post-decision press conference, the former Banca d'Italia boss stressed the word "also", and said that means "we haven't finished with conventional measures."
 
"There was discussion of QE today," he explained. "It was not neglected in the course of a very rich and ample discussion."
 
Dollar gold edged back to $1282.50 per ounce as Draghi spoke, the level from where prices jumped sharply ahead of yesterday's ADP non-farm US jobs data.
 
"On an intraday basis," says London market-maker Scotia Mocatta in a technical note, the gold price's "failure to break through anticipated resistance at the 200-day MA [moving average] highlights the limited potential for upside movement within a downtrend that began in mid-March."
 
But "technically," counters one bullion-dealing bank's Singapore desk, "gold's recent decline is prime for a rebound."
 
"Short-term, the gold charts look negative," agrees analyst Edward Meir for INTL FCStone in the US, "but we should note that prices are now approaching oversold territory, just as they were severely overbought a few weeks ago."
 
In the absence of European Central Bank QE – widely seen as opposed by the German Bundesbank – "Incumbent European politicians are girding themselves," says FX strategist Steven Barrow at Standard Bank today, "for a political backlash against fiscal austerity and sky-high unemployment in next month's European elections."
 
With 503 tonnes at last count, the European Central Bank is the world's 12th largest gold bullion holder amongst official institutions.

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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