Gold slips on news that ECB would indeed announce a quantitative monetary stimulus plan
It was mixed finish for bullions at Comex on Wednesday, 21 January 2015. Gold prices saw a modest sell off in late-morning trading on Wednesday, as a report the European Central Bank would indeed announce a quantitative monetary stimulus plan boosted U.S. and European stock markets, which in turn prompted some profit-taking pressure in gold. Gold lost some of its earlier momentum to snap a seven-day winning streak on Wednesday, unable to defend its first foray above $1,300 an ounce since August.
Gold for February delivery relinquished its earlier high to dip 50 cents to settle at $1,293.70 an ounce after settling at its highest price in five months on Tuesday. Despite Wednesday's retreat, the precious metal is still up about 9% year to date.
March silver futures advanced 24 cents, or 1.3%, to $18.19 an ounce in electronic trading.
Early on, gold prices had moved above what was psychological resistance at the $1,300.00 level and hit another five-month high. February Comex gold was last down $3.80 at $1,290.50 an ounce. Spot gold was last down $3.60 at $1,291.00. March Comex silver last traded up $0.209 at $18.175 an ounce.
Gold came down from its daily highs in late-morning trading as U.S. and European equities rallied in the immediate aftermath of a report from the Wall Street Journal that said a proposal from the ECB's executive board calls for government bond purchases of about 50 billion Euros ($58 billion) a month that would last for at least one year. The report said bond purchases could amount to at least 600 billion Euros.
A German government five-year bond auction Wednesday fetched a record-low 0.04% return for investorsa sign that European investors fully expected a quantitative easing package on Thursday that will work to further weaken the Euro currency. Other European bond market yields are also near their record lowsmainly on concerns of freshly printed Euros streaming into the financial system in the coming months.
The Bank of Japan on Wednesday cut its domestic consumer price inflation outlook to 1.0% from 1.7%, on an annual basis, and blamed lower crude oil prices for the move. This news was actually not as dour as many expected on the deflation-worry front. The BOJ left its monetary policy unchanged.
China's central bank chief said Wednesday that lower oil and other raw commodity prices are a positive for China's economic growth, and said China will keep its monetary policy stable.
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