09 Dec, 2016
Gold prices ended the U.S. day session moderately lower Thursday. A strong U.S. dollar against the world currencies continues to be a significantly bearish weight on the precious metals markets. The technical chart posture for gold also remains firmly negative. February Comex gold was last down $4.10 an ounce at $1,173.40. March Comex silver was last down $0.135 at $17.14 an ounce.
Gold prices did push up to near unchanged on the day just after the European Central Bank announced Thursday morning it is keeping interest rates unchanged and will extend the ECB’s bond-buying program by nine months, to the end of 2017. However, the ECB in April will reduce its monthly bond purchases to 60 billion Euros, from 80 billion currently. The marketplace initially deemed that news as a bit hawkish on ECB monetary policy. The Euro currency rallied sharply and the U.S. dollar index sold off.
However, as ECB President Mario Draghi gave his press conference, traders and investors saw his remarks as favoring the monetary policy doves, as he implied the ECB remains fully ready to stimulate the Euro zone economy, if conditions warrant. The Euro currency and dollar index quickly reversed courses as the Euro dropped sharply and the USDX rallied strongly. The rally in the greenback helped to push gold prices back to near their daily lows.
Trader and investor focus will quickly move to next week's FOMC meeting, where the Federal Reserve is expected to raise U.S. interest rates.
The other key “outside market” on Thursday saw Nymex crude oil prices higher. The gold market bulls have been disappointed the recent solid rally in the oil market has not provided any lift to the yellow metal. Oil traders are awaiting the results of this weekend’s meeting between OPEC and non-OPEC oil producers in Moscow, regarding implementing the cartel’s stated intention to cut oil-production levels. Some are still skeptical that OPEC will actually cut its production.