Gold on Hold Ahead of ECB Statement, US Jobless Claims
Frankfurt (Dec 4) Gold is flat on Thursday, as the spot price stands at $1201.10 in the European session. On the release front, today’s highlight is the ECB rate announcement. In the US, the major event of the day is Unemployment Claims, with the markets expecting a improvement from the previous reading. We’ll get a look at additional job data on Friday, with the release of Nonfarm Payrolls.
The ECB has cut interest rates to the bone and implemented asset purchases, but these measures have done little to boost weak growth and inflation levels in the Eurozone. There is strong pressure on ECB head Mario Draghi to take additional measures, such as quantitative easing (QE), which was used successfully by the US Federal Reserve to help boost the economy. However, there is resistance to QE from some quarters, such as the German central bank, so it’s unlikely that Draghi will make such a drastic move at this time. Still, if the ECB issues pessimistic forecasts about the economy in today’s rate statement or press conference, we could see the euro lose ground.
Gold prices took traders on a roller coaster ride early in the week. On Sunday, gold dropped sharply after Swiss voters rejected a proposal to boost the Swiss National Bank’s gold reserves. Had the motion passed, the SNB would have been required to purchase some 1500 metric tons of gold over five years. Gold prices quickly recovered and remain close to the 1200 level. Still, the long-term range for gold remains bearish, as the US economy strengthens and the markets prepare for a rate hike in 2015.