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Commodities News – Gold gains as ECB continues with loose monetary policy
May 3, 2013 9:24 amVideo
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Gold has gained 1.5 percent since the announcement of interest rate cuts by the European Central Bank on Thursday to a record low 0.5 percent.
As the president of the ECB, Mario Draghi said the central bank will continue with stimulus measures, this pushed investors to the safe haven precious metal.
Analysts have attributed recent strength in gold prices to expectations that central banks across the world are increasingly adopting looser monetary policy and flooding the financial system with money.
Easy-monetary policies tend to raise the risk of inflation and gold is seen as an inflation hedge.
The Federal Reserve is another major central bank that has indicated it will continue with quantitative easing. Such a measure tends to weaken the dollar and this makes gold priced in USD cheaper to buy for investors holding foreign currency.
Analysts say that as the Fed and the ECB continue with their easy-monetary policies, as well as to stronger demand for physical gold, this will help buoy gold prices.
Gold for June delivery has gained over $21, or 1.5 percent since yesterday and climbed to a high of $1,478 in the European session trading on Friday, recovering recent losses which sent the precious metal to as low as $1,440.
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