Gold/EUR tanks after Draghi kept QE size unchanged

By FXStreet FXStreet (Mumbai) – Gold prices in the EUR terms ticked lower following the expected cut in the deposit rate and extended losses further after the ECB’s Draghi surprisingly kept the size of the QE program unchanged.

Gold/EUR a victim of short squeeze in EUR

The disappointed EUR bears squared off short positions that were initiated in anticipation of parity levels following ECB’s expansion (size) of the QE program. However, Draghi left the size unchanged, but did extend the maturity of the program to end-March 2017 and kept doors open for future adjustments if necessary.

However, markets were disappointed, leading to a sharp spike in the EUR/USD. The resulting broad based USD weakness helped Gold/USD recover losses, but the gains in the metal remain capped ahead of Yellen speech.

Consequently, the Gold/EUR pair fell to a session low of EUR 974.28/Oz. Prices now trade around EUR 978-979/Oz levels.

Gold/EUR Technical Levels

The immediate resistance is seen at 985.14 (Aug 25 low), above which gains could be extended to 990.43 (Previous day’s low). On the other hand, a break below 971.56 (Sep 11 low) would expose 949.14 (Dec 16, 2014 low).
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Source:: FX Street