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ECB Boosts Precious Metals, Gold & Silver Retreat

January 11, 2013 at 2:09 by Vladimir Vyun

Precious metals rallied yesterday after the European Central Bank left its monetary policy unchanged. Gold and silver paused the advance today, but platinum and palladium extended the rally.

Some analysts had though that the ECB would cut its interest rates, but that did not happen. Bank’s President Mario Draghi warned that weakness of the European economy will continue in 2013:

Available statistics and survey indicators continue to signal further weakness in activity, which is expected to extend into this year, reflecting the adverse impact on domestic expenditure of weak consumer and investor sentiment and subdued foreign demand.

Such comments spurred speculations that the central bank may take steps to stimulate the economy. At the same time, Draghi indicated that Europe’s economy should experience recovery later this year, improving the market sentiment:

However, more recently several conjunctural indicators have broadly stabilised, albeit at low levels, and financial market confidence has improved significantly. Later in 2013 a gradual recovery should start, as our accommodative monetary policy stance, the significant improvement in financial market confidence and reduced fragmentation work their way through to private domestic expenditure, and a strengthening of foreign demand should support export growth.

Traders’ mood was also optimistic on good news from China. Exports of the biggest Asian economy expanded more than was expected, leading to bigger-than-anticipated trade surplus.

Gold fell $4.00 (0.24 percent) to $1,673.90 per troy ounce as of 1:44 GMT today, while silver retreated $0.07 (0.24 percent) to $30.85 per ounce on COMEX. Futures on Palladium advanced $1.10 (0.16 percent) to $700.10 per ounce. Platinum was flat at $1,630.40 per ounce.

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