Gold Prices Rebounds from 6-Year Low After ECB Rate Decision

Gold Prices Rebounds from 6-Year Low After ECB Rate Decision

The prices of gold turned higher from near 6-year lows on Thursday as a rebound of the euro after the European Central Bank said the reduction in the minimum deposit rate that investors had been waiting at the ECB’s policy-setting meeting.

Spot gold was up 0.4 per cent at $1,056.85.

Gold for February delivery on the Comex tacked on $4.50, or 0.45%, to trade at $1,058.30 a troy ounce.

Comex gold fell to $1,045.40, a level not seen since February 2010, amid mounting expectations that the Fed will raise interest rates at its December policy meeting.

The euro climbed over 2% against the dollar, while the dollar index, which measures the strength of the greenback versus a basket of major currencies, fell 1.5% to 98.53.

The president of the European Central Bank, Mario Draghi, made no changes in the size of the purchase program of monthly assets of the central bank, leaving it in € 60 billion.

Earlier in the day, the ECB cut its deposit facility rate to 0.3% from 0.20%, in line with market expectations. The central bank also continued its benchmark interest rate at a record low level of 0.05%, with expectations.

The cut was smaller crew than some operators had expected, leading to a rebound more than 2 percent in the euro.

The strength in the euro helped lift the dollar from a peak hit January 12/2-year high on Wednesday, when the chair of the Federal Reserve Janet Yellen hinted at a rate hike in the United States later this month , saying he was “waiting” for the climb.

A hike in policy meeting from 15 to 16 December would be the first time in nearly a decade. The rising rates tend to weigh on gold, as it increases the opportunity cost of holding assets that pay no interest.

US non-farm payrolls data on Friday will be intensely monitored for more clues about the direction of US policy.

In the morning trade at the Multi Commodity Exchange, gold for delivery in far-month February 2016 declined by 0.08% to Rs 25,027 per ten grams as participants trimmed positions, tracking a weak trend overseas.

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