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Updated 03:04 22/09/20

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ECB Signals it’s ready to start QE

Duncan Richardson, News Editor
5 Jan 2015, 10:15 a.m.

ECB President, Mario Draghi, has sent yet another signal to the market that the ECB is ready to implement a full blown quantitative easing program if deflation continues to take hold in the Eurozone. As expected the gold and silver price rose on Draghi’s comments.

To halt deflation the world’s largest trading bloc could copy the USA and UK and start purchasing government debt in the form of bonds. The ECB hopes that injecting newly created currency units into the financial system will stimulate the economy. Record low interest rates so far have failed to stop deflation taking hold and it appears the ECB is now running out of options. Unsurprisingly the Euro fell against the U.S dollar following the news.

Traders are speculating the ECB will announce a QE program at the banks next policy meeting which is scheduled for 22nd January. Traditionally gold and silver perform well when Central Banks create money via QE. The gold price has already increased £20 since the start of the year whilst silver has advanced just under 5%.

Gold is currently trading at £780.38 per ounce, silver £10.48 per ounce, platinum £789.26 per ounce and palladium £520.97 per ounce.

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