Gold Prices Slip as ECB Raises Interest Rates

Gold prices traded lower on Thursday, following an interest-rate hike and statement from the European Central Bank (ECB). However, the losses were later pared as investors digested fresh U.S. inflation data.

Price Action

• Gold futures for December delivery (GCZ23) declined by $1.20, or 0.1%, to $1,931 per ounce on Comex. This marked its lowest finish since August 22.
• Silver futures for December (SIZ23) shed 27 cents, or 1.1%, to $22.92 per ounce.
• Platinum for October delivery gained $1.10, or 0.1%, to $906 per ounce, while palladium for December delivery (PLV23) rose by $2.70, or 0.2%, to $1,263 per ounce.
• Copper for December delivery (HGZ23) rose 3 cents, or 0.8%, to $3.82 per pound.

Market Drivers

Traders described the ECB’s 25 basis point interest rate hike as “dovish,” potentially increasing the allure of gold by suggesting that global bond yields may not need to rise significantly.

According to a team of macro analysts at TD Securities, “The ECB hiked rates 25bps today, taking the deposit rate to 4.00% in what can only be characterized as a dovish hike. This is a clear sign that absent any further notable upside surprises to inflation and its drivers, they are done hiking rates.”

The U.S. dollar also gained strength from the ECB hike, leading to a fall in the euro. The ICE U.S. Dollar Index was up 0.2% at 104.93.

In U.S. economic data released on Thursday morning, August retail sales and wholesale producer prices showed positive growth. Retail sales in the U.S. rose 0.6%, while the producer-price index, a gauge of wholesale-price growth, increased by 0.7%.