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Gold recovers on the back of a weak dollar as news comes in from ECB forum

The gold price is recovering after the “fat fingered muppet” crash that happened on Monday, which saw an uncharacteristic sell-off push gold $20 downward. Spot gold rose 0.4% to $1,251.91 by 04:08 GMT today, and US gold futures for August delivery were up 0.5% to $1,252.50.

Part of gold’s recovery since Monday’s drop is attributable to a weak dollar, which has since slipped to 96.322 on the dollar index, its lowest since November. “The dollar and equities are on the back foot at the moment, providing a little support to gold,” said a Sydney-based trader to Reuters, adding that the Wall Street volatility index had risen by 12% yesterday.

The main reason for the weak dollar and shaky markets is a delay in a key US healthcare reform bill. Senate Majority Leader Mitch McConnell will postpone the vote on the Republican leadership’s healthcare bill until after the July 4 Senate recess (when senators break from the deliberative assembly), according to CNN.

Getting the bill through is important for the Trump administration, as it will show they can bridge the gap between moderates and staunch conservatives in a divided Republican party. Markets have previously been rocky when Trump’s economic reforms did not sail through the house, as it contributes to political uncertainty.

Other news came from the European Central Bank’s (ECB) forum on central banking, which is in full swing. The chair of the Federal Reserve Janet Yellen commented that there shouldn’t be a financial crisis in her lifetime, owing to the banking reform undertaken post-2008.

Mario Draghi, president of the European Central Bank, hinted yesterday at the ECB trimming its balance sheet and winding off the stimulus. This comes as a surprise to many — Draghi noted during his speech that monetary policy was “effective in raising demand”, and despite eurozone inflation being below the 2% target, the central bank held firm on rates instead of cutting them on June 8.

PhotoImages Money, under CC BY 2.0

Link to this article: : http://www.goldmadesimplenews.com/gold/gold-recovers-on-the-back-of-a-weak-dollar-as-news-comes-in-from-ecb-forum-13246/

Posted by on Jun 28 2017. Filed under Gold News, Markets. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

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