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Gold Advances After ECB Rate Decision and Policy Stance

Gold is rallying to highs since February, while Silver is recovering. Reasons are speculations of FOMC rate cut, and ECB dovish stance and unchanged monetary policy.
Mauricio Carrillo
Gold Advances After ECB Rate Decision and Policy Stance
European Central Bank with Euro Sign, Frankfurt

Gold is trading positive on Thursday as investors are digesting ECB decision to leave monetary policy unchanged and not-that-good economic data in the United States.

Investors are also giving attention to the trade conflicts between the United States with China and Mexico. Besides, they are speculating in a shift in the Federal Reserve policy and a more dovish approach.

Finally, market is also focused on the US employment report, including nonfarm payrolls and wages that will be published on Friday.

Metals round-up

Gold is extending gains for the seventh day in a row as the unit is underpinned by a weak dollar and speculations of a fed rate cut soon. XAU/USD is now trading at highs since February.

Silver is testing the 15.00 area again after a brief period of correction performed on Wednesday.

Copper is positive on the day, but the move is more on a consolidation matter after Wednesday decline than a recovery at all. It found support at 2.6145, and it is now trading at 0.60% positive on the day at 2.6380.

Platinum is consolidating lows following the significant decline performed on Wednesday. After falling 3.7% from yesterday’s highs at 820.10 to minimums at 802.70, the unit is fighting to keep levels above the 800.00 area.

Palladium is trading sideways between 1,320 and 1,350 as the unit is contained by the 50-day moving average at 1,363 but supported, at the same time, by the 200-day MA at 1,274.40.


ECB raises growth expectations for 2019 and fuels Euro

The European Central Bank raised 2019 growth expectations to 2.1% now from 2.0% previously expected. However, it lowered 2020 expectations from 1.6% to 1.4%, and 2021 from 1.5% to 1.4%.

On inflation, they raised inflation for 2019 to 1.3% from 1.2% previously expected; 2020 was revised down to 1.4% from 1.5%, and 2021 was left unchanged at 1.6% inflation expected.

Mario Draghi, ECB president, affirmed that data was better than expected in Q1 in Europe; however, global headwinds continue to weigh, and it makes the ECB thinks for weaker growth in Q2 and Q3.

In this framework, the Euro rallied on Draghi’s opening statement, sending EUR/USD to fresh daily highs and the dollar to test lows at 96.75; and fueling gold’s rally.

As a matter the context, Dollar index is trading down as the Euro is trading on a firm note following comments from Mario Draghi and ECB stance on the economy. DXY is now 0.50% negative and heading toward 96.75, Wednesday low.

EUR/USD, on the other hand, has jumped above the 1.1310 level for the first time since April 17 as the European Central Bank pushed back rate guidance and left its policy unchanged.

Gold extends gains above 1,330

XAUUSD daily chart June 6

Gold is trading positive on Thursday amid a strong euro and a weaker dollar that are underpinning the metal to log its seventh positive day in a row.

XAU/USD is adding gains yes, but it still has to break above the 1,346, yesterday’s high, where the bullion got a rejection.

Currently, XAU/USD is trading 0.50% positive on the day at 1,337. Next resistance, as mentioned, is at 1,346, and then 1,350.

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