Gold Holds Steady Despite ECB's 25bp Rate Hike — SkimNews
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- European Central Bank raised its three key interest rates by 25 basis points on Thursday, lifting the deposit facility to 2.50%, main refinancing operations to 2.65%, and marginal lending facility to 2.90%
- ECB cited the Middle East conflict as a source of persistent inflation, stating in its monetary policy statement that inflation 'is set to remain well above target for an extended period'
- Gold largely shrugged off the ECB decision; spot gold in euros fell 0.62% to €3,760.33/oz, while USD-priced spot gold dropped 0.77% to $4,367/oz
- Analysts said the ECB's hawkish tone could create downward pressure on gold ahead of the Federal Reserve's September 16 monetary policy decision
- CME FedWatch Tool shows markets pricing a 64% chance of a Fed rate hike on September 16, a key near-term catalyst for bullion
- ECB staff projections forecast eurozone headline inflation averaging 3.0% in 2026, 2.5% in 2027, and 2.1% in 2028, with growth forecasts of 0.9%, 1.4%, and 1.5% respectively
Why it matters: With 64% odds of a Fed rate hike on September 16 already priced in, gold faces a dual tightening test from the ECB and the Fed. The metal's muted 0.77% drop despite synchronized hawkish central banks suggests traders view the move as largely anticipated — but any surprise from the Fed next week could break gold out of its narrow range.
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