Reuters reported that the potentially unlimited bond buying program announced by the European Central Bank caused the price of gold to break through the $1,700 per ounce mark, despite tempered gains due to positive U.S. economic data.
As quoted in the report:
Bullion spiked to $1,713.79, its highest since early March, as the euro rallied after ECB President Mario Draghi outlined plans for a potentially unlimited bond buying program aimed at lowering struggling euro countries’ borrowing costs and resolving the euro-zone’s four-year debt crisis.
Gold tends to benefit from an environment of low interest rates and any resulting strength in the euro against the U.S. dollar could further fuel the rally, although gains may be limited by anticipation ahead of a key gauge of U.S. employment on Friday.
Ole Hansen, senior manager at Saxo Bank, commented:
Gold is holding because the market has been given what it was hoping for, but in order for gold to move decisively higher from here, we need to see what numbers the U.S. will bring to the table.
The longer we stay above $1,700, the better. It gives all the newly established long positions a bit of confidence.