Yesterday’s European Central Bank (ECB) monetary policy decision supported the price of spot gold (XAU/USD). The ECB, as expected, struck a broadly dovish tone. ECB President Mario Draghi forcefully asserted that the Eurozone needed continued accommodation. They are, however, starting to discuss the fate of the QE program. This will be discussed by September. The promise of loose monetary conditions was supportive for non-interest-bearing assets like gold, which rose higher.
The euro also got a quite a bit of support on the ECB’s comments as the financial markets ignored the promise to reconsider the QE asset purchase program. The euro added a full percentage point against the US Dollar, two a new two year high. There is a broad weakness for the greenback at large right now across the G10 Forex universe. Tat added to gold’s anti fiat properties, giving the bullion even more support.
Today there is a lack of big economic related headlines. This could lead to price drifting and investors rebalancing portfolios for the week ahead. The FOMC monetary policy decision is due next week and this could put some pressure on the bullion.
There are also sentiment trends, in play, that investors should pay attention to. Especially their ability to drive bond yields. This will influence the yellow metal’s price trajectory as well.
Gold Technical Analysis
The price of the yellow metal rose higher. Price action is moving towards the upside barrier lining up at $1,250.40 per ounce. A daily close above this level will challenge the next upside barrier lining up at 1,261.15.
The alternative technical analysis, notes the first layer of technical support lining up a 1,239.60. The next downside barrier, if breached, lines up at $1,226.25 per ounce.