Daily Gold Update

Source:Bill Musgrave, American Gold Exchange

Austin— Gold slid 0.4% to close above $1,172 after the European Central Bank announced changes to its program of monetary easing, rallying the dollar and curtailing demand for alternative stores of value.

The ECB surprised financial markets by deciding to cut quantitative easing by 25% per month , from 80 billion to 60 billion euros, at its meeting on monetary policy. Most analysts were expecting an extension of bond-buying at current levels. Tantamount to printing money, QE typically devalues a nation's currency by increasing the supply of money in circulation and driving down bond yields.

The euro immediately spiked higher on the announcement, weakening the dollar and boosting gold prices as high as $1,181 in intraday trade.

But in his press conference after the meeting, ECB chief Mario Draghi surprised the markets a second time, saying QE will be extended throughout 2017, three months longer than expected, and could be raised back up to 80 billion euros per month at any time. "The key message," he promised, "is to show there no tapering" of monetary stimulus in the near future.

Draghi's dovish postscript reversed the early trade, driving the euro to its biggest one-day loss since Brexit. The dollar rallied in response, pressuring gold and other commodities denominated in it for international trade by making them more expensive overseas.

The other precious metals were mixed. Silver lost 1% while platinum and palladium added 0.1% and 0.9%, respectively.

At the Comex close: February gold slid $5.10 to $1,172.40; March silver lost 18 cents to $17.10; January platinum picked up 60 cents to $943.80; March palladium gained $6.40 to $739.05 an ounce.