(Kitco News) - The gold market is attracting a modest bid in Europe as the European Central Bank leaves interest rates unchanged, even as energy-led inflation pressures persist.
In a much-anticipated move, the ECB announced that it would leave its three key interest rates unchanged at 2.50%, 2.65% and 2.90%, respectively.
“While the full effects of the energy shock are still unfolding, underlying inflation has remained broadly stable so far and wages do not show a material response at this stage. The increased magnitude and duration of the energy shock, as well as the implications for indirect and second-round effects, are likely to drive up inflation and lower growth,” the analyst said.
The gold market has managed to bounce off its lows following its initial reaction to the ECB's announcement, but it remains under pressure. Spot gold last traded at €3,619.95 an ounce, down 0.75% on the day.
Gold is holding up better against the euro than against the U.S. dollar. The yellow metal continues to test critical support above $4,000 an ounce and is down roughly 1% against the greenback.
