Gold All-In For Draghi And The ECB; India Gold Imports Up

Next couple of days will be crucial for Gold and Silver, especially after the ECB stance and Draghi press release.
Mauricio Carrillo
Euro Building - ECB will affect Gold and Silver prices

Gold and Silver are in a wait-and-see mode ahead of the ECB monetary policy decision and the post-announcement press release from Mario Draghi.

Economic data in Europe disappointed market on Thursday as the GDP for the Q4 of 2018 showed that economy rose only 1.1% year over year, versus the 1.2% expected by the market.

All Gold’s eyes on ECB monetary policy decision

Recent numbers are pushing the ECB into a trouble situation and as FX Empire analyst Bob Mason said in a recent article, “has there been a steadying in the economic indicators for the ECB to avoid having to downwardly revise growth forecasts again?”

Mason highlights the possibility to the ECB to take a more bearish stance. “Italy’s struggling, as is Germany and, while the service sector PMI numbers provided some hope, the ECB will need to be mindful of China,”

Investors should pay attention to a new targeted long term refinancing operation, the TLTRO. What would be the conditions in the case Mario Draghi announces it.

With a dovish ECB, the Euro will go down again and the Dollar will gain more room. That means more pressure for commodities to the downside.

In a recent article published by CNBC, Commerzbank analysts were quoted saying that if the euro depreciates in response, “the gold price is likely to come under pressure”.

India hungry for Gold push imports 5.5% YoY up in February

Bloomberg reported that Gold imports are climbing in India for the second month in a row as jewelry businesses are hot amid purchases for weddings.

In February, India purchased 70.7 tons of Gold, a 5.5% increase from the same month in 2018.

“Rural demand is on the rise thanks to higher crop support prices and more rural-friendly schemes by the government,” Gnanasekar Thiagarajan, director at Commtrendz Risk Management Services said to Bloomberg.

Gold mixed on Thursday as investors wait for the ECB catalyst

Gold daily chart XAUUSD March 7

All eyes are now on ECB president Draghi as experts are expecting a dovish stance that would put the dollar up and then the gold down.

Currently, XAU/USD is trading almost flat on the day at 1,286.20.

Silver is performing its third day with sideways as the pair moves in a small range between 1,280 and 1,290.

Gold will remain bearish as far the XAU/USD is below the 1,300 level. However, gold is well supported at 6-week low $1,280 levels.

Silver sits just above 15.00 and waits for developments

XAG/USD daily chart March 7

Silver is extending its consolidation phase for the third day in a row as the XAG/USD seems also trapped just above the 15.00 area but also below the 200-day moving average at 15.15.

Currently, XAG/USD is trading at 15.08, 0.04% positive on the day. However, what silver shows is hesitation as the pair is performing a daily Doji candle.

FX Empire Analyst Christopher Lewis highlighted in a recent article that Silver is highly influenced by the US Dollar and a soften Greenback has the silver trading sideways.

Lewis believes that the next couple of days will be crucial for the metal as “if we bounce from here, then there is a really good chance that we go looking towards the $16.00 level again.”

On the other side, “if we were to break down below the $14.90 level, it’s likely that we will reach down towards the $14 handle again,” Lewis concluded.

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