Gold investors may have their eyes across the European Central Bank’s Thursday meeting, as warning signs of a slowing economy and deflationary pressures indicate further easing.
How it’ll accomplish this may be the large question.
If the central bank cuts its deposit rate by 10 basis points, which will go right down to negative 40 bps.
While that seems probably the most likely outcome, Macquarie Capital Markets analyst Michael Gray noted this might damage confidence, especially in the banking sector.
Nonetheless, he pointed out that these developments are positive for the gold market, which climbed 3.7 percent towards the highest level since February 2015 a week ago.
“The gains counseled me the greater impressive given Friday’s non farm payrolls,” Gray said, highlighting strong development of 242,000 jobs for your U.S. economy in February.
Most notable for gold, is always that it’s decoupled growth from key U.S. economic data in recent weeks.
As an impact, Gray noted that global yields are actually more important for bullion, which is why there is lots concentrate on the ECB.
Meanwhile, gold ETFs still attract investors, with a minimum of 38 tonnes price of holdings being added the other day.
The analyst noted this brings the year-to-date total to 271 tonnes, that’s similar to roughly Half of worldwide mine production up to now in 2016.
Silver investors will also be joining in, adding 416 tonnes of holdings in March thus far. When pace continues, it’ll mark the largest monthly inflow for silver ETFs since July 2013.
