The price of gold has risen to £997.75 per ounce – up from £977.89 yesterday – following news from the European Central Bank that the Eurozone will experience even weaker growth this year.
The rise of £19.86 per oz for gold (2.03%) was similarly matched in US Dollars, with gold up to $1,300.48 per ounce from $1,283.20 – a gain of $17.28 per ounce (1.34%). Brexit’s pressures on the Pound once again weakened the currency against the Dollar, leading to the exaggerated domestic gains.
Yesterday the European Central Bank announced that they were cutting their growth forecast for the Eurozone in 2019, with the ECB president Mario Draghi stating that there would be no increases in interest rates this year and that the ECB would reintroduce cheap loans for banking institutions as a stimulus package for the continent.
The Euro fell to a four-month low following the news, dropping to 1.12 against the Dollar and 0.86 against the Pound, and President Draghi was in poetic form whilst explaining how the ECB can take action…
Draghi: In a dark room you move with tiny steps. You don’t run but you do move.— European Central Bank (@ecb) March 7, 2019
The Pound Sterling’s value slipped today following the latest plea for votes from Prime Minister Theresa May. At a factory in Grimsby, the PM argued that “we may never leave at all” if her deal isn’t passed on Tuesday, but the odds are heavily stacked against her.
The Pound is currently down at $1.30 having been at a five-week high of $1.33 last week, and the combination of Brexit fatigue and the Eurozone’s gloomy forecast has left investors nervous.
The Eurozone isn’t the only area suffering this week either. In the United States there were very weak employment figures (only 20,000) reported for February from the Department for Labor, and the US stock markets were on course for their worst week in 2019 and the worst week since November 2016, with the chance for consecutive losses at close on the main three markets every day this week.
China’s markets were similarly poor today, despite reporting strong gains last week and early this week. The Shanghai Exchange was down 4% today following news from the Chinese government that exports had fallen by 20% in January and February. Strong sales to France and Brazil were massively outweighed by reduced sales to the US and the UK, and despite the recent US trade deficit figures, China is beginning to feel the pinch of the ongoing trade war with America.
Gold’s strong performance this year in the midst of market volatility and poor economic growth forecasts has meant that swift 2% gains like today’s are becoming commonplace, and with US debt over $20 trillion, China approaching a credit debt crisis, the Eurozone slowing down and Brexit still to be resolved, it looks promising for gold’s demand and price to stay high in the coming weeks.