Gold’s Reaction to ECB Action

The US dollar was forced higher as a result of the European Central Bank’s move to lower their key interest rate. As a result of these events the price of gold was slightly lower.

“Precious metals, like all the other markets, came to life when the ECB surprised everyone with a 25 basis-point interest-rate cut,” GFT Markets technical analyst Fawad Razaqzada said.

Traditionally, gold and other precious metals can go down in price when the US dollar is strong and performing well, especially in comparison to other world currencies.

In addition to the lowering of the prices of gold and silver benchmark equities indexes also fell a bit after the ECB announced their interest rate cut.

“The market will be volatile,” Bryn Mawr Trust Co. chief investment officer Ernie Cecilia said. “You had some good economic news today and we’ll see what the payrolls numbers are tomorrow. The fear is that with better-than-expected economic numbers, tapering will commence sooner rather than later.”



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