Euro Tumbles After Trichet, Gold Hits $1,480
Thursday, May 5, 2011 11:42 am EST
The euro currency tumbled over 2 cents to 1.4586 against the U.S. dollar on Thursday, and gold futures joined in the sell-off.
At the European Central Bank’s (ECB) monetary policy meeting this morning, not only did the ECB not raise interest rates (it was not expected to), but ECBPresident Jean-Claude Trichet did not make any mention of a possible rate hike at next month’s meeting, which many economists had been forecasting.
Moreover, given the substantial rally in the euro against the dollar in recent weeks – the currency cross hit a 17-month high of 1.4925 yesterday – investors appeared to have been pricing in a more hawkish tone from Trichet at a minimum.
With the U.S. Dollar Index (DXY) climbing as a result of the euro’s weakness, precious metals came under further selling pressure. Gold futures tumbled as much as $36.50, or 2.4%, to an intra-day low of $1,478.80 per ounce. The yellow metal did bounce back above $1,490 in late morning trading, however.
Silver futures posted significantly larger losses, plunging as much as $3.79, or 9.6%, to an intra-day low of $35.60 per ounce. Silver did pare a portion of its losses as morning trading progressed, but remained substantially lower at $36.70 per ounce.
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