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Precious Metals Rally on ECB & Fed

March 6, 2014 at 18:15 by Vladimir Vyun

Precious metals rallied today following the gains of the euro and the drop of the dollar. This happened as a result of the European Central Bank monetary policy announcement as well as on the outlook for the Federal Reserve policy.

The ECB maintained its interest rates unchanged on today’s meeting, while some analysts have anticipated an increase of stimulus. Central bank’s President Mario Draghi said on the press-conference after the meeting:

On the basis of current information and prevailing futures prices for energy, annual HICP inflation rates are expected to remain at around current levels in the coming months. Thereafter, inflation rates should gradually increase and reach levels closer to 2%.

The comments suggested that demand may increase for precious metals as an inflation hedge.

Meanwhile Federal Reserve Bank of New York President William Dudley hinted that interest rates in the United States will likely not rise before mid-2015. Fed Chairwomen Janet Yellen said last week that the central bank may change the pace of stimulus reduction in case if US economic growth slows.

April futures for delivery of gold rose $10.5 (0.78 percent) to $1,350.8 per troy ounce as of 18:10 GMT on COMEX today. May futures for silver jumped as much as $0.39 (1.85 percent) to $21.62 per ounce. Spot price for platinum added $8 (0.54 percent) to $1,486.25 per ounce, while spot price for palladium gained $6.95 (0.90 percent) to $780 per ounce.

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