Gold prices remain down as ECB raises interest rates and signals more to come in 2023
(Kitco News) - Spot gold prices are holding near session lows against the euro and not seeing any new price movement after the European Central Bank raised interest rates by 50 basis points across the board, in line with expectations.
The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be increased to 2.50%, 2.75% and 2.00% respectively, the central bank said.
The ECB also struck a hawkish tone signaling further rate hikes will be needed to bring inflation pressures down.
“In particular, the Governing Council judges that interest rates will still have to rise significantly at a steady pace to reach levels that are sufficiently restrictive to ensure a timely return of inflation to the 2% medium-term target. Keeping interest rates at restrictive levels will over time reduce inflation by dampening demand and will also guard against the risk of a persistent upward shift in inflation expectations,” the ECB said in its monetary policy statement.
Spot gold is not seeing much movement against the euro in initial reaction to the ECB’s hawkish stance. The precious metal last traded at €1,668.60 an ounce, down more than 1% on the day.
Gold futures also remain down on the day as the U.S. dollar dominates financial markets. February gold futures last traded at $1,786 an ounce, down 1.68% on the day.