Gold Opens Lower on Thursday as ECB Stands Pat

March 8th, 2018 by

charting gold price

Thursday morning’s meeting of Europe’s central bank left global markets a bit ambivalent.

In response, the gold price was down slightly (-0.35%) to $1,320/oz after slipping in the early morning hours. The precious metal is virtually unchanged over the past month.

Spot silver dipped just below unchanged (-5¢) at $16.40/oz. Platinum moved sideways to $950/oz.

Meanwhile, palladium pared gains to $975/oz (+0.8%).

European Central Bank Turns Surprisingly Hawkish

The ECB stood pat on interest rates at its March meeting as expected, but investors paid greater attention to the language of its policy statement.

While the central bank will continue its monthly bond purchases of €30 billion through at least September, it removed language that indicated the bank would step up with more quantitative easing (QE) if necessary.

ECB euro

ECB President Mario Draghi told the press that the rhetorical shift was unanimous among the 25 members of the bank’s Governing Council.

The change is seen as a step toward the end of QE in the eurozone.

The given reason for scaling back stimulus expectations was an improving outlook for Europe’s economic growth and inflation rate.

As a result, the euro fluctuated and European stocks built upon earlier gains. France’s CAC 40 led the way, still up 1.15%.

Bonds in Europe rebounded from a wave of selling. In the U.S., the 10-year Treasury yield hovered around 2.86%.

Little attention was given to weekly jobless claims, which rose 21,000. New filings for unemployment benefits had previously been at a 48-year low.

Potential Trade War Still On Investors’ Minds

Markets still awaited developments in the ongoing drama over tariffs and trade wars.

President Trump remains intent on using steel tariffs to protect American producers despite opposition to the move from Congress and the media.

trade wars

In reaction to the rather vocal pushback against the policy proposal, Trump seems unlikely to impose a blanket import duty.

There has already been discussion of exempting key U.S. trading partners such as Canada.

Nonetheless, authorities in Europe and China have forcefully announced that they will respond to any new trade barriers with retaliatory measures of their own.

The U.S. dollar held onto early morning gains, trading at 89.8 on the DXY index.

Other major currencies posted relatively minor losses against the USD.

Stocks also opened higher in the U.S. after a mixed performance on Wednesday. The Nasdaq was on track for its fifth straight winning session as the technology sector remains hot.

Elsewhere, shares were up 1% in Shanghai and rallied 1.5% in Hong Kong. However, stocks saw more modest gains overnight in Tokyo.

For commodities, trade war fears caused copper prices to slump 1.7% to about $3.08 per pound.

Crude oil was steady after a big drop yesterday. WTI crude traded at $61.30/bbl and Brent crude was around $64.30/bbl.

 

The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.