Excellent point.-g-
kitco.com
we wait on further illumination from the ECB by the looks of things..
quote.bloomberg.com
Gold Close to 4-Month High as Traders Await ECB Rate Outcome
April 1 (Bloomberg) -- Gold was little changed near a four- month high in London as traders awaited the outcome of a European Central Bank meeting on interest rates, which may cause the euro to drop against the dollar.
Gold, denominated in dollars, becomes cheaper for euro holders when the European currency strengthens. Higher interest rates in Europe than in the U.S. have attracted more savers, boosting the euro and gold.
``An interest rate cut would be a negative trigger for gold,'' said Alexander Zumpfe, an analyst at Dresdner Kleinwort Wasserstein in Frankfurt, in an e-mailed note. ``It probably will narrow the interest rate differential between the Eurozone and the U.S., which in turn is likely to set the euro under pressure.''
Gold for immediate delivery was trading up 55 cents at $425.65 an ounce at 9:42 a.m. It earlier reached $427.45, the highest since Jan. 12. The euro was down 0.2 percent at $1.2295. Yesterday it reached a one-week high of $1.2322.
Only two of the 28 economists surveyed yesterday by Bloomberg News expect a reduction in the ECB's 2 percent target rate today. Fifteen see lower rates by the end of the second quarter, up from eight of 31 economists surveyed last week.
Gold Supported
``We think that the ECB will choose to stay on hold this morning,'' Zumpfe said. ``We continue to see gold being well supported for the time being.''
The ECB will announce its decision at 12:45 p.m. London time. U.S. rates are currently half the level in Europe at a 45- year low of 1 percent.
The euro gained 20 percent against the dollar last year, matching the increase in gold prices as holders of the European currency snapped up cheaper metal. In the past 12 months the euro has only advanced 12 percent, while gold has gained 27 percent.
Gold often rises in times of turmoil as it is seen as a secure investment. It has climbed 6.4 percent since the March 11 train bombings in Madrid killed 190 people. The euro has slipped 0.5 percent.
Among other precious metals for immediate delivery in London, silver rose 7 cents, or 0.9 percent, to a 16-year high of $7.95 an ounce. Platinum advanced $7, or 0.8 percent, to $910.50 and palladium slipped $2, or 0.7 percent, to $284.50. |
