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Bloomberg
Gold rises, erasing its previous decline to the lowest level in 15 months, after the European Central Bank (ECB) raised rates by a larger-than-expected 50 basis points.
European stocks and bonds slumped and the euro rose after the ECB joined global central banks in driving outsized rate increases to quell inflation. Bullion climbed back above $1,700 an ounce. The increase, first interest rate hike in 11 years by the ECB, comes as political crisis in Italy ramps up the pressure on the central bank to shield the most vulnerable euro-zone members from market speculation.
“We view gold as the defensive play against broader market turmoil and rampant inflation,†BMO Capital Markets analyst Colin Hamilton said.
The precious metal has been volatile this year, rallying to a near record above $2,000 an ounce in March following Russia’s invasion of Ukraine. Gold has since lost 17% as Federal Reserve tightened monetary policy and the dollar soared on the back of rising interest rates, haven
demand and recession fears.