UPDATE ON DRAGHI STATEMENT and PRECIOUS METALS (10:15 pm EDT)
European Central Bank President Mario Draghi spoke early this morning (U.S. time) after the ECB announced it would leave interest rates unchanged. Mr. Draghi defended his bank's recent accommodative economic policies including negative interest rates. When asked if rates could be pushed lower (they are now at negative 0.4%) he responded: “If there is going to be an unwanted tightening of financing conditions….the Governing Council stands ready to act with all available instruments...”. This sounds like a further interest rate drop is not out of the question. Most markets seem to have been unaffected by the ECB's policy statement and Draghi's comments, but it is still early in the day. At the time of this writing (10:00 am EDT) the euro is flat but the U.S. dollar is rising a bit after dropping briefly to the 94 support line earlier this morning. Gold and silver prices are rallying strongly as gold approaches last week's high of $1,262. I am going to hold off selling these metals short this morning until we see how far this rally will go. As I stated in yesterday's blog, if gold makes a new yearly high (i.e. moves above $1,283) we may need to abandon our bearish strategy and stay on the sidelines.
European Central Bank President Mario Draghi spoke early this morning (U.S. time) after the ECB announced it would leave interest rates unchanged. Mr. Draghi defended his bank's recent accommodative economic policies including negative interest rates. When asked if rates could be pushed lower (they are now at negative 0.4%) he responded: “If there is going to be an unwanted tightening of financing conditions….the Governing Council stands ready to act with all available instruments...”. This sounds like a further interest rate drop is not out of the question. Most markets seem to have been unaffected by the ECB's policy statement and Draghi's comments, but it is still early in the day. At the time of this writing (10:00 am EDT) the euro is flat but the U.S. dollar is rising a bit after dropping briefly to the 94 support line earlier this morning. Gold and silver prices are rallying strongly as gold approaches last week's high of $1,262. I am going to hold off selling these metals short this morning until we see how far this rally will go. As I stated in yesterday's blog, if gold makes a new yearly high (i.e. moves above $1,283) we may need to abandon our bearish strategy and stay on the sidelines.
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