From the Trading Desk
In the overnight session, the European Central Bank cut interest rates across the board and expanded its monthly bond purchases by one-third to €80 billion per month. The ECB cut its main refinancing rate for Eurobanks to the historically low 0% while the deposit rate on excess reserves was slashed even further to negative .40%. European Central Bank President Mario Draghi cited persistent weakness in consumer prices as well as the threat of a Chinese slowdown as the predominant contributing factors for the comprehensive measures of quantitative easing. Counterintuitively, the euro skyrocketed against the USD in the wake of the ECB news and reached a one month high. After holding support at the ninth point in a trendline dating back to mid-February, the ECB revelation was exactly what gold needed to press higher today. It closed near the highs of the day and will look to challenge the double top at $1,280. Silver followed gold’s trajectory higher and its near term target is the double top at $15.80.
In yesterday’s report I said look to oil as it had established a pattern with gold, trading in the same direction. That was trumped today by the ECB’s Draghi how had his moves blow up in has face and actually strengthen the Euro and the dollar, at first moved up and gold down but both reversed and confirming that gold still has a date with $1,300. Either way I remain short term bullish.
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About Doug EberhardtDoug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534
Disclosure:
Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with capital you can’t afford to lose. This is neither a solicitation nor an offer to Purchase/Sell futures or options. No representation is being made that any account will or is likely to achieve gains or losses similar to those discussed in this outlook. The past track record of any trading system or methodology is not necessarily indicative of future results.
All trades, patterns, charts, systems, etc. discussed in this outlook and the product materials are for illustrative purposes only and not to be construed as specific advisory recommendations. All ideas and material presented are entirely those of the author.