(Kitco News) - The gold market continues to consolidate and hold support above $2,000 an ounce but is seeing no major change in momentum either way as the European Central Bank announced it would leave interest rates unchanged.
Thursday, in a widely anticipated move the ECB said it would leave the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility unchanged at 4.50%, 4.75% and 4.00% respectively.
While it appears the central bank has ended its tightening cycle, it appears to be in no hurry to start easing as fighting inflation remains the top priority.
“The incoming information has broadly confirmed its previous assessment of the medium-term inflation outlook. Aside from an energy-related upward base effect on headline inflation, the declining trend in underlying inflation has continued, and the past interest rate increases keep being transmitted forcefully into financing conditions,” the ECB said in its monetary policy statement.
“The Governing Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner. Based on its current assessment, the Governing Council considers that the key ECB interest rates are at levels that, maintained for a sufficiently long duration, will make a substantial contribution to this goal. The Governing Council’s future decisions will ensure that its policy rates will be set at sufficiently restrictive levels for as long as necessary,” The ECB added.
The gold market is not seeing much reaction to the latest monetary policy announcement. Spot gold against the U.S. dollar last traded at $2,016.50 an ounce, up 0.15% on the day. In comparison, gold is relatively unchanged against the euro, last trading at €1,848.97 an ounce.
