Gold pushes higher against Canadian dollar as Bank of Canada starts to taper bond purchases
(Kitco News) - Gold is moving higher against the Canadian dollar as the Bank of Canada announced a reduction in its weekly bond purchase program.
In its monetary policy statement, the Bank of Canada said that it will now purchase $2 billion in bonds weekly, down from $3 billion.
"This adjustment reflects continued progress towards recovery and the Bank's increased confidence in the strength of the Canadian economic outlook," the central bank said in its monetary policy statement.
Gold is seeing a little movement in currency markets against the Canadian dollar. Spot gold last traded near a session high of $2,280.75 an ounce, up 0.81% on the day.
According to some analysts, gold is getting a boost as the BoC's move wasn't as aggressive as some expected.
Although the central bank has reduced its bond purchase program. It said that it expects its monetary policy to remain accommodative for the foreseeable future.
"The Governing Council judges that the Canadian economy still has considerable excess capacity and that the recovery continues to require extraordinary monetary policy support. We remain committed to holding the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved. In the Bank's July projection, this happens sometime in the second half of 2022. The Bank's QE program continues to reinforce this commitment and keep interest rates low across the yield curve," the bank said in its monetary policy statement.
Royce Mendes, senior economist at CIBC, said that the BoC's monetary policy announcement was in line with expectations.
"The Bank of Canada largely stuck to the script today, providing only a few surprises for markets to chew on," he said. "The more muted growth expectations for this year, combined with forecasts maintaining the outlook for rates to remain on hold into the second half on next year, is being interpreted dovishly by market participants who were looking for a more hawkish turn from Canadian central bankers. As a result, rates are falling and the Canadian dollar is depreciating."