Gold prices push higher when ECB shoots monetary bazooka, eases interest rates and restarts bond loan repurchase

(Kitco News) – Gold prices are pushing higher than $ 1500 per ounce, as the European Central Bank announces significant monetary easing, in line with expectations.

For almost a month, ECB economists expected to launch a monetary policy "bazooka" at this meeting.

On Thursday, the ECB said it would lower the interest rate on the deposit facility by 10 basis points to -0.50%.

At the same time, the central bank is also starting its monthly bond purchasing program.

"Net purchases will be restarted under the Governing Council's Asset Purchase Program (APP) at a monthly pace of 20 billion euros from November 1," the central bank said. "The Governing Council expects that they will run for as long as necessary to reinforce the accommodating effect of the key policy rates, and that they will terminate shortly before it begins to raise key ECB rates."

The Bank will also continue to reinvest the principal of payments from maturing securities purchased under APP, for an extended period after the date the Governing Council begins raising central ECB interest rates.

The Bank's new series of quarterly targeted long-term refinancing operations (TLTRO III) will be modified to maintain favorable bank lending conditions, ensure smooth transfer of monetary policy and further support the attentive attitude to monetary policy.

And finally, the ECB said that a two-stage system for reserve payments will be introduced, in which part of banks' holdings of surplus liquidity will be exempt from the negative deposit facility rate.

Gold prices had decent gains ahead of the announcement and pushed higher in the initial response to the expected lazy announcements. Desemberguld futures last traded for $ 1[ads1],517.80 ounces, up nearly 1% on the day.

Many market participants have noted that global monetary policy will continue to support gold prices.

Investors and traders will now be willing to hear what ECB President Mario Draghi has to say during this press conference, which starts at 8:30 am EDT.

Andrew Kenningham, Head of European Economics at Capital Economics, said that although the latest announcement was largely expected, the details are more rude than expected. However, he added that it is uncertain whether this will be enough to boost European economic growth.

"However, it is doubtful that this will do much to start the euro zone economy, let alone reach the inflation target of almost 2%.