Gold price pushing to new all-time high against euro as ECB cuts interest rates

(Kitco News, Thurs. Sep. 12th, 2024) – Gold is testing important resistance against the euro, pushing above its April all-time highs; the precious metal is seeing solid bullish momentum as the European Central Bank continues its easing cycle with another 25 basis point cut.

Thursday, the ECB said its deposit facility rate will be decreased by 25-basis points to 3.50%. At the same time, the interest rates on the main refinancing operations and the marginal lending facility will be decreased to 3.65% and 3.90% respectively.

Following the broader move in the marketplace, gold has reached a new all-time high against the euro in its initial reaction to the ECB rate cut. Spot gold last traded at €2,288.68 an ounce, up 0.48% on the day.

The ECB said in its monetary policy statement that inflation while, relatively sticky continues to moderate as economic growth slows.

“Recent inflation data have come in broadly as expected, and the latest ECB staff projections confirm the previous inflation outlook. Staff see headline inflation averaging 2.5% in 2024, 2.2% in 2025 and 1.9% in 2026, as in the June projections,” the ECB said in its monetary policy statement. “At the same time, staff continue to expect a rapid decline in core inflation, from 2.9% this year to 2.3% in 2025 and 2.0% in 2026.”

While inflation remains stable, the central bank has lowered its growth outlook.

“Staff project that the economy will grow by 0.8% in 2024, rising to 1.3% in 2025 and 1.5% in 2026. This is a slight downward revision compared with the June projections, mainly owing to a weaker contribution from domestic demand over the next few quarters,” the ECB said.

Posted by:

Jack Dempsey. President

401 Gold Consultants LLC