The ECB is preparing measures to buy Eurozone sovereign bonds.
Draghi does not believe unsterilized sovereign bond purchases violate its mandate against monetary financing.
If forced to sterilize sovereign bond purchases, Draghi will implement a weak sterilization regime.
Expectations of lower bond yields and an increase in uncertainty in the Eurozone are accretive to gold prices.
Unconventional Instruments
During his November press conference ECB President Mario Draghi introduced and emphasized new language concerning purchases of sovereign bonds. In the following quote from his introductory statement, note that the first sentence is standard language found in previous statements. However the second portion is new and points toward an acceleration in the timeline for Eurozone quantitative easing.
Should it become necessary to further address risks of too prolonged a period of low inflation, the Governing Council is unanimous in its commitment to using additional unconventional instruments within its mandate. The Governing Council has tasked ECB staff and the relevant Eurosystem committees with ensuring the timely preparation of further measures to be implemented, if needed.
Twice during the question and answer session Draghi specifically pointed to the new statement language. Draghi highlighted its unanimous support by the Governing Council and iterated the high level of importance of these new preparations.
