Gold prices edged lower after running into resistance near the 10-day moving average at 1,230, following the ECB meeting where the central bank left rates unchanged and said stimulus is still needed. The ECB was slightly more confident on growth and inflation and is poised to end its quantitative easing program in December and hold rates steady until the summer of 2019. Support on the yellow metal is seen near the July lows at 1,211 and then the July 2017 lows at 1,204. Momentum has turned positive as the MACD (moving average convergence divergence) index generated a crossover buy signal. Softer than expected U.S. Durable goods data helped capped the greenback, which has placed a floor under gold prices.
ECB left policy rates on hold and confirmed the guidance on QE
ECB left policy rates on hold and confirmed the guidance on QE, with net asset purchases expected to be reduced from October and phased out at the end of December this year. Rates are still expected to remain unchanged at least through the summer of 2019, so at least in the initial statement no clarification on whether that means until the end of September next year.
ECB slightly more confident on growth, inflation. Draghi said the economy is proceeding along a solid, broad based growth path, even though uncertainties, especially related to trade, remain prominent. Significant monetary stimulus remains necessary and this will be provided by the remaining net asset purchases and re-investments and the ECB remains ready to adjust all instruments if needed. Latest data stabilized according to Draghi and point to ongoing growth, with the ECB’s policy continuing to underpin domestic demand.
German GfK consumer confidence fell back
German GfK consumer confidence fell back to 10.6 with the advance August reading, from 10.7 in July. The breakdown for the July reading, the last that is available, shows that trade jitters and Brexit concerns are overshadowing ongoing improvements on the labor market, with expectations for the economic outlook dropping sharply, despite the fact that income expectations actually held pretty steady. The willingness to buy was also little changed and remains at high levels.