Gold has risen in price moderately, retreating from a three-week low. Support for precious metals gave the ECB meeting results as well as changes in risk appetite.
ECB does not changed the parameters of monetary policy: the basic rate remained at a record low of 0% and the deposit rate at -0.4%. At the same time, the head of the Central Bank Draghi signaled in September, a possible further easing. In September, the ECB economists will present the new forecasts for growth and inflation, allowing a more clear asses of the probability of slowing down economic recovery. As for the impact of Brexit, he said that everything will depend on how long the negotiations will take place between the UK and the EU on the new conditions of interaction, as well as the results of these negotiations. . “It is too early to judge the impact of this risk,” – Draghi said, adding that Brexit increased problems for the European economy, given the geopolitical uncertainties. Also he said that ECB is ready to use all available instruments in the framework of the mandate in the case of lower probability of achieving the inflation target of about 2% over the coming years.
A further increase in gold prices holds back the strengthening of the US currency on the back of positive housing data. The National Association of Realtors said that home sales in the secondary market increased by 1.1 percent and reached a seasonally adjusted annual rate of 5.57 million in June from a revised level of 5.51 in May. Sales are currently up 3.0 percent from June 2015 and remain at the highest annual rate since February 2007 (5.79 million.). Experts point out that recently presented statistics on the US increases the likelihood of the Fed raising interest rates. This is unlikely to happen at the July meeting of the central bank, but closer to the end of the year. Currently, the market players assess the chances of a rate hike of 43% in December.
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