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(Kitco News) - The gold market is holding on to solid gains as the European Central Bank continues to raise interest rates and shifts to a more neutral data-dependent stance.
As expected the ECB increased its three key interest rates by 25 basis points.
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 4.25%, 4.50% and 3.75% respectively, the central bank said.
The central bank provided little forward guidance on future rate hikes.
“The developments since the last meeting support the expectation that inflation will drop further over the remainder of the year but will stay above target for an extended period. While some measures show signs of easing, underlying inflation remains high overall. The past rate increases continue to be transmitted forcefully: financing conditions have tightened again and are increasingly dampening demand, which is an important factor in bringing inflation back to target,” the ECB said in its monetary policy statement.
“The Governing Council will continue to follow a data-dependent approach to determining the appropriate level and duration of restriction. In particular, its interest rate decisions will continue to be based on its assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation, and the strength of monetary policy transmission,” the central bank added.
The gold market is not seeing much reaction to the widely anticipated move from the ECB. August gold futures last traded at $1,977.20 an ounce, up 0.36% on the day.
