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MTECHTIPS:-Gold plunges nearly 1% as ECB lowers inflation, GDP forecasts

MTECHTIPS:-Gold plunges nearly 1% as ECB lowers inflation, GDP forecasts

Gold futures plummeted on Thursday as the dollar surged against the euro, after the European Central Bank left interest rates at record lows while providing strong hints that it will use all the tools necessary to stimulate the economy and boost inflation throughout the euro zone. On the Comex division of the New York Mercantile Exchange, gold for December delivery traded between $1,121.20 and $1,133.80 an ounce before closing at $1,123.30, down 10.30 or 0.91%. Gold closed lower for the fourth time in five sessions and eighth time in the last trading days after peaking above $1,165 an ounce late last month. The precious metal is still up by more than 2.5% over the last month of trading. Gold likely gained support at $1,110.00, the low from August 18 and was met with resistance at $1,169.00, the high from Aug. 24. Gold futures fell precipitously in European afternoon trading after the ECB held interest rates at 0.05%, while downgrading its GDP and inflation forecasts over the next two years. The ECB also kept its marginal lending rate at 0.30% and left its facility rate unchanged at 0.20%. Citing higher downside risks due to lower energy and commodity prices, ECB head Mario Draghi lowered the central bank’s inflation projections for the remainder of 2015 to 0.1% from a previous estimate of 0.3%. The ECB has also lowered inflation projections for 2016 and 2017 from 1.5% and 1.8% to 1.1 and 1.7% respectively, Draghi added. At the same time, the ECB reduced GDP projections over the period predicting that it will remain below 2% through the end of 2017.

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