UBS: A Larger ECB Stimulus Package Could Be Gold Positive
New York (Jan 22) Gold remains under pressure Thursday after the European Central Bank announced that it would leave interest rates unchanged. Comex February gold futures were last down $2.20 to $1,291.50 an ounce. However, investors are waiting for ECB President Mario Draghi’s press conference, where he is expected to announce a new bond purchasing program. Anticipating the gold market’s reaction to increased stimulus spending could be difficult, say analysts from UBS. “While accommodative policies should be gold-friendly, in the case of the anticipated QE announcement from the ECB today, near-term pressure on the euro could dampen the upside for gold,” they say. “A scenario where the ECB delivers a substantially larger package versus current expectations, and especially versus the UBS estimate of [€1 trillion], could potentially encourage gold to overlook the euro impact and focus more on the ECB's balance sheet expansion.”
Source: KitcoNews