(Kitco News) – The gold market appears to be largely ignoring the European Central Bank’s decision to raise interest rates as selling pressure remains limited against the euro. On Thursday, the ECB announced it would raise its three key interest rates by 25 basis points. The interest rates on the deposit facility, the main financing operations and the marginal credit facility will increase to 2.50%, 2.65% and 2.90%, respectively. The central bank said it was forced to raise interest rates as inflation pressures remain well above its 2% target. policy to ensure that inflation stabilizes at its 2% medium-term target,” the ECB said in its monetary policy statement. Although under pressure, the gold market is not seeing any significant increase in selling in the initial reaction to the ECB’s rate hike. Spot gold last traded at €3,760.33 an ounce, down 0.62% on the day. Selling pressure is broadly in line with the broader market. Spot gold was last trading at $4,367 an ounce, down 0.77% on the day. Some analysts have said the ECB’s rate hike could create some downward pressure on gold as it sets a hawkish tone ahead of the Federal Reserve’s monetary policy decision next week. According to the CME FedWatch tool, markets see a 64% chance of a rate hike on September 16. The ECB expects headline inflation to average 3.0% in 2026, 2.5% in 2027 and 2.1% in 2028. For inflation, excluding energy and food, the base forecast foresees average inflation of 2.5% in 2026, 2.6% in 2027 and 2.3% in 2028. Meanwhile, the base projection for economic growth in the eurozone is 0.9% by 2026. 1.4% by 2027 and 1.5% by 2028. “The outlook remains very uncertain, with upward risks for inflation and downward risks for economic growth. In relation to the energy shock, the updated scenarios developed by the staff illustrate the wide range of outcomes on how growth and inflation would evolve under different assumptions about its intensity and duration, as well as its indirect and second-round effects,” the ECB said. “may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee its accuracy. This article is strictly for informational purposes only. It is not a request for carry out any exchange of commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept liability for losses and/or damages arising from the use of this publication.
