ECB, BOE Debasement Continues - Interest Rates Remain At 300 Year Lows

Published on 6 February 2014

Today’s AM fix was USD 1,258.50, EUR 930.64 and GBP 772.42 per ounce.
Yesterday’s AM fix was USD 1,257.00, EUR 930.35 and GBP 772.30 per ounce.

Gold climbed $3.20 or 0.26% yesterday to $1,257.90/oz. Silver rose $0.36 or 1.85% to $19.85/oz. Both surged in value immediately after the poor ADP number led to safe haven buying due to concerns about the U.S. economy.

Gold is marginally higher in all currencies again today ahead of key interest rate decisions from the BOE and ECB.

Traders are positioning for what is widely expected to be a dovish press conference by Draghi, with an outside chance of another rate cut to nearly 0%. The main refinancing rate is already at a record low of 0.25% and the deposit rate is already 0%.

Savers and pensioners continue to be punished by ultra loose monetary policies.

The ECB usually cuts the refi rate by 25 basis points, but the most common forecast this time around is for a cut by 15 basis points to 0.1%. Analysts seem split in their forecast, but in recent days more and more have guessed that now is the time for a rate cut. The verdict is out at 12:45 GMT, or 07:45. EST, with more details in ECB President Mario Draghi’s press conference at 13:30 GMT.

At 12:00 GMT, the Bank of England announces the outcome of its latest monthly meeting. Markets are waiting to see if new BoE governor Mark Carney will alter guidance on lifting Britain's 300 year record low interest rate.

The Monetary Policy Committee is widely expected to keep the BOE's main interest rate at a record-low of 0.5%. It is widely predicted also to maintain quantitative easing at £375 billion pounds, opting against following the U.S. Federal Reserve in slightly reducing debt monetisation.

Ultra loose monetary policies and financial repression are set to continue for the foreseeable future which underlines the important diversification benefits of owning physical gold.

“January 16, 2013, the day the Bundesbank blinked and demanded its bullion, will be shown to be the beginning of the end of the gold price suppression scheme by the world's central banks.”