Gold sees weak price action against euro as ECB leaves interest rates unchanged

(Kitco News) – The gold market continues to consolidate within the broader global currency landscape, as it has been unable to hold gains above key resistance levels against both the euro and the U.S. dollar.

Selling pressure on gold against the euro emerged after the European Central Bank left interest rates unchanged Thursday morning.

In a much-anticipated decision, the central bank announced that its interest rates on the deposit facility, main refinancing operations, and marginal lending facility will remain unchanged at 2.00%, 2.15%, and 2.40%, respectively.

At the same time, the ECB offered little forward guidance on its future monetary policy.

“The incoming information is broadly in line with the Governing Council’s previous assessment of the inflation outlook. Domestic price pressures have continued to ease, with wages growing more slowly. Partly reflecting the Governing Council’s past interest rate cuts, the economy has so far proven resilient overall in a challenging global environment. At the same time, the environment remains exceptionally uncertain, especially because of trade disputes,” the central bank said in its monetary policy statement.

The gold market has not shown any significant shift in momentum in response to the ECB’s latest monetary policy decision. Spot gold last traded at €2,860.60 an ounce, down 0.56% on the day.

Gold’s price action in euro terms remains broadly in line with the overall market. Spot gold last traded at $3,360.20 an ounce, down 0.70% on the day.

The ECB reiterated that it will remain data-dependent and follow a meeting-by-meeting approach to its monetary policy.

“In particular, the Governing Council’s interest rate decisions will be based on its assessment of the inflation outlook and the risks surrounding it, in light of the incoming economic and financial data, as well as the dynamics of underlying inflation and the strength of monetary policy transmission. The Governing Council is not pre-committing to a particular rate path,” the ECB said.

Neils Christensen has a diploma in journalism from Lethbridge College and has more than a decade of reporting experience working for news organizations throughout Canada. His experiences include covering territorial and federal politics in Nunavut, Canada. He has worked exclusively within the financial sector since 2007, when he started with the Canadian Economic Press.

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