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    XAU/USD: investors remain cautious on 10.03.2016

    Taking into account uncertainty about the measures, which ECB might adopt today, investors remain cautious and refrain from taking actions in the financial markets. Volumes of trading operations are low.

    If ECB decreases interest rate on deposits by 10 basis points to -0.4% and increases monthly program of quantitative easing by 20 billion euro, as expected by market participants, Euro will grow in the short-term. In case of the more decisive measures by ECB, such as decline in rates on deposits by 20 basis points to -0.5% and the increase of monthly volume of asset purchases by 5 billion euro will lead to the decrease in Euro by 1.5-2%. The pair EUR/USD might return below 1.0800.

    Considering correlation of the prices of gold and the pair EUR/USD, which is close to 92%, the pair XAU/USD may have the same reaction to the decision by ECB.

    Since the beginning of the month the price of gold has reached the highs of 2016, reaching the level of 1280.00 USD per ounce. Since the beginning of the year the price has increased by 18%.

    The rise was caused by negative data from the USA and China.

    If ECB “surprises” the market by adopting aggressive measures of monetary policy easing, both, European and American stock indices, as well as the USD will go up. In this case the price of gold will drop.

    Lower level of the interest rate in Eurozone will weaken Euro and increase demand for the USD, which will add pressure on gold.

    Note, that interest rate decision in Eurozone will be known at 14:45 (GMT 2); at 15:30 press-conference of the European bank will be held and Mario Draghi will give his comments on the monetary policy of the European Central bank.


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