Gold: Focus on ECB interest rate decision

Market participants are waiting for news in the Brexit process as well as today’s interest rate decision by the European Central Bank (ECB) and a meeting of the Federal Reserve’s (Fed’s) monetary policy committee next week.

London (GodmodeTrader.de) – Gold continues to move sideways below $1,500 on Thursday. Market participants are waiting for news from the Brexit process, as well as today’s European Central Bank (ECB) interest rate decision and next week’s Federal Reserve (Fed) Monetary Policy Committee meeting.

After the British Parliament thwarted Prime Minister Boris Johnson’s plans to close the Brexit deal by 31 October, Johnson had to apply to the European Union (EU) for another extension. The EU has already signalled its agreement, so a hard Brexit should be averted for the time being. However, it has not yet been decided how long the deadline will be extended. It is also unclear whether Great Britain will use the renewed extension of the deadline for new elections to resolve the deadlock in parliament.

 

The focus today is on the central bank meeting of the ECB. Analysts currently do not expect an interest rate cut, but the ECB is likely to maintain its focus on further monetary easing and could cut interest rates further into negative territory in the coming months. Already in September, the ECB had decided to resume net bond purchases from November.

The Fed’s next interest rate decision is due on 30 October. The market generally expects the currency authorities to lower US key interest rates for the third time in succession. According to the CME’s FedWatch Tool, the likelihood of a rate cut in the coming week of 25 basis points to between 1.50 and 1.75 percent is currently 93.5 percent, according to the CME’s FedWatch Tool. After the British Parliament thwarted Prime Minister Boris Johnson’s plans to bring the Brexit deal to a close by October 31st, Johnson had to apply to the European Union (EU) for a further extension of the deadline. The EU has already signalled its agreement, so a hard Brexit should be averted for the time being. However, it has not yet been decided how long the deadline will be extended. It is also unclear whether Great Britain will use the renewed extension of the deadline for new elections to resolve the deadlock in parliament.