Gold prices holding its ground as ECB leaves interest rates unchanged

In an expected move, the ECB announced it would leave interest rates on the deposit facility, the main refinancing operations, and the marginal lending facility unchanged at 2.00%, 2.15%, and 2.40%, respectively.

The gold market showed little volatility in its initial reaction to the ECB’s monetary policy decision and continues to experience broad-based profit-taking while maintaining elevated support. Spot gold last traded at €3,685.57, down 0.3% on the day.

Gold’s move against the euro is in line with its performance against the greenback. Spot gold last traded at $4,317.14 an ounce, down nearly 0.5% on the day.

The ECB provided little forward guidance on its monetary policy stance beyond 2025; however, it does see inflation pressures picking up slightly.

According to staff projections, headline inflation is expected to average 2.1% in 2025, 1.9% in 2026, 1.8% in 2027, and 2.0% in 2028. Inflation excluding energy and food is projected to average 2.4% in 2025, 2.2% in 2026, 1.9% in 2027, and 2.0% in 2028.

“Inflation has been revised up for 2026, mainly because staff now expect services inflation to decline more slowly. Economic growth is expected to be stronger than in the September projections, driven especially by domestic demand,” the ECB said.

Looking at economic projections, the central bank sees euro-area GDP rising 1.4% in 2025, 1.2% in 2026, and 1.4% in 2027, with growth expected to remain at 1.4% in 2028.