Gold has posted modest gains on Thursday, recovering losses sustained a day earlier. The spot price is trading at $1196 per ounce in the European session. On the release front, it’s a very quiet day, with only one event, Flash Services PMI. No change is expected in this reading.
The euro hasn’t had much to cheer about lately, and the currency took a tumble on Friday, losing over 150 points. This was a result of remarks from ECB head Mario Draghi, who warned that that inflation expectations were declining to levels that were very low and said the ECB is ready to expand its stimulus program. Deep interest rate cuts haven’t boosted growth or inflation, so the ECB has reached deeper into its toolbox and purchased covered bonds and asset-backed securities. So far, these purchases have been from the private sector, but the ECB could decide to expand these purchases to government bonds, known has quantitative easing (QE). However, there is strong resistance to QE from national central banks, such as the powerful German Bundesbank.
In the US, there was a flurry of releases on Thursday. Consumer inflation met expectations, as CPI came in at 0.0% and Core CPI posted a gain of 0.2%. Unemployment Claims were almost unchanged, with a reading of 291 thousand. Philly Fed Manufacturing Index soared to 40.8 points and US Existing Home Sales improved to 5.26 million.
XAU/USD 1196.93 H: 1203.67 L: 1192.77
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