Gold prices have held firm despite a European Central Bank announcement yesterday (Thursday) that confirmed changes to monetary policy in what could be the first step to reducing stimulus efforts. The ECB said that it would maintain current interest rates but would slow its rate of bond purchases.
In the official announcement, the bank said, “Based on a joint assessment of financing conditions and the inflation outlook, the Governing Council judges that favourable financing conditions can be maintained with a moderately lower pace of net asset purchases under the pandemic emergency purchase programme (PEPP) than in the previous two quarters.
““In support of its symmetric two per cent inflation target and in line with its monetary policy strategy, the Governing Council expects the key ECB interest rates to remain at their present or lower levels until it sees inflation reaching two per cent well ahead of the end of its projection horizon and durably for the rest of the projection horizon, and it judges that realised progress in underlying inflation is sufficiently advanced to be consistent with inflation stabilising at two per cent over the medium term. This may also imply a transitory period in which inflation is moderately above target.”
Gold didn’t flinch in reaction, maintaining its pricing levels above the key £1,297 ($1,800) marker. With gold again showing its reliability and safe haven status even in the face of policy change, there’s no reason to delay.