Gold Could Gain Bounce From ECB Meeting

  • Posted Thursday, September 04, 2014 at 01:24 PM

Los Angeles CA, September 4 (Tangible Investments) - by James O’Dell - Gold and Silver prices were mixed on Wednesday with Gold gaining $3.60 or 0.28 percent to close at $1,269.65 an ounce, as the yellow metal edged higher on technical and physical buying ahead of a key European Central Bank (ECB) policy meeting on Thursday. The price of Silver eased one cent to close at $19.19 an ounce while the Gold/Silver ratio, the measure of the number of Silver ounces needed to buy an ounce of Gold, rose to 66.16.

Analysts, note that Gold could bounce higher on Thursday should the ECB delay in launching a much anticipated quantitative easing (QE) program. Markets have been pricing in looser monetary policy from the ECB since the economic symposium in Jackson Hole last month, according to analysts, and it has hurt both the euro and Gold prices.

There is a good chance for a short term bounce in Gold prices on Thursday since it is unlikely that the ECB will trim interest rates or that ECB President Draghi will announce any new QE measures, according to Bank of New York Mellon's Neil Mellor. “Since Jackson Hole, everyone has been getting excited about QE but there are still some hindrances to that process,” cautions Mellor.

Three factors will delay the announcement of looser monetary policy at Thursday’s ECB meeting, says Mellor, the first being Germany's disapproval of the ECB buying government bonds, the second is the September launch of the ECB’s new targeted long-term refinancing operations (LTRO) which could be disrupted by the announcement of a fresh QE strategy; and finally, loosening monetary policies any further may be a disincentive for euro zone countries to push for needed economic reforms, which is President Draghi’s ultimate goal according to Mellor.

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