Gold Pulls Back After ECB | July 26, 2018
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Gold Pulls Back After ECB

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Gold Pulls Back After ECB

Markets again turned their attention to interest rates and monetary policy as the European Central Bank (ECB) wrapped up its July meeting.

The gold price was down slightly (-$4.50) to $1,227 per ounce.

Spot silver also fell, slipping 10¢ (-0.65%) to just below $15.50/oz.

Platinum and palladium each lost around 0.9%.

ECB Stands Pat

This month's gathering of the ECB was watched closely for signs about when the central bank will follow the Federal Reserve's lead and begin raising interest rates.

Interest rates were left unchanged for the time being, but ECB President Mario Draghi offered no definitive answer on when the first rate hike will come. Current forecasts predict it will happen late next summer.

Nonetheless, the ECB maintained its guidance that it will begin to wind down its quantitative easing purchases by December.

In response, the euro was down 0.3% to $1.1695. The pound sterling was off by 0.2%.

This helped the dollar rise slightly to 94.4 on the DXY index.

Meanwhile, President Trump and his counterpart from the European Commission, Jean-Claude Juncker, have reportedly reached a handshake agreement on trade. The two leaders promised not to impose any new tariffs while more negotiations will take place going forward.

Durable Goods and Jobless Claims

A pair of economic reports in the U.S. took a backseat to the ECB decision this morning.

The Department of Labor released the latest jobless claims from last week. After touching their lowest in more than 48 years, initial claims for unemployment benefits rose by 9,000. The total number of jobless claims (217,000) was slightly higher than had been forecast (215,000).

Even with the moderate increase, the labor market continues to appear relatively tight.

Tesla Car Factory
\n(photo by Jervetson: Flickr)

Meanwhile, last month's durable goods orders—purchases by companies of equipment meant to last at least three years—came in higher, although slightly short of expectations. New orders rose 1.0% in June, somewhat weaker than expected but still a positive result.

Wall St opened mixed after closing higher yesterday. The tech sector lagged behind the broader markets, dragged lower by Facebook. Shares of Facebook plummeted by more than 25% in early trading due to news that the social networking platform will suffer weaker profit margins when it implements heightened security measures.

Stocks jumped in Europe, rallying as much as 1.5% in Germany. However, shares were barely lower in London.

Most indices in Asia were down overnight. The Shanghai Composite slumped almost 1.2% lower, but the Topix index ended 0.7% higher in Tokyo.

Oil prices were mostly unchanged. WTI crude traded flat at $69.30/bbl and Brent crude was up modestly to $74.10/bbl.

Government bonds around the world saw a mixed performance amid quiet trading. The yield on the 10-year Treasury fell two basis points to 2.95%.

The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.

About the Author

Everett Millman

Everett Millman

Analyst, Commodities and Finance
Managing Editor

Everett has been the head content writer and market analyst at Gainesville Coins since 2013. He has a background in History and is deeply interested in how gold and silver have historically fit into the financial system.

In addition to blogging, Everett's work has been featured in CoinWeek, Advisor Perspectives, Wealth Management, Activist Post, and has been referenced by the Washington Post.

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