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.
Doug 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
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