Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
The German bunds traded modestly firmer Monday as investors speculate that the European Central Bank (ECB) will lower its key interest rate in December’s monetary policy meeting in the wake of persistent weak inflation. Also, markets largely shrugged off better-than-expected PMI figures for October.
The yield on the benchmark 10-year bond, which moves inversely to its price, fell 1 basis point to -0.006 percent, the yield on long-term 30-year note also dipped 1 basis point to 0.60 percent and the yield on short-term 3-year bond slid ½ basis point to -0.66 percent by 09:20 GMT.
Germany’s activity sector output rebounded during the month of October, following solid co-operation from private sector output, with the country’s composite Purchasing Managers’ Index (PMI) touching a 3-month high during the period.
Flash Germany PMI Composite Output Index rose to 55.1 in October, from 52.8 in September. Also, flash services PMI Activity Index jumped to 54.1 this month, from 50.9 in September, while the flash index for the country’s manufacturing sector rose to 55.1 in October, a 33-month high, from 54.3 in the previous month; flash Germany manufacturing output index modestly rose to 56.9, compared to 56.4 in September, data released by HIS Markit showed Monday.
Moreover, the European Central Bank in its new survey report mentioned that the median forecast for 2016 Eurozone GDP being upgraded to 1.6 percent, from the previous estimate of 1.5 percent and kept unchanged at 1.4 percent for 2017. On the other hand, inflation forecast was trimmed to 0.2 percent for 2016, left steady at 1.2 percent for 2017, and cut to 1.4 percent for 2018, from prior 1.5 percent.
This drop in the 2018 inflation forecast to further below the ECB's target will be noted by the ECB, although comfort will be taken from the longer-term forecast remaining in line with the target of just-below-2 percent.
In addition, the European Central Bank (ECB) in its October monetary policy meeting released last Thursday, maintained interest rates at -0.40 percent and the pace of quantitative easing (QE) at 80 billion Euros per month.
ECB President Mario Draghi reconfirmed that QE will run at its current pace until March 2017 or beyond if needed, and until the path of inflation is in line with the target.
A moderate, steady pace of growth is expected, though the economy remains subject to downside risks. There is no convincing upward trend in core inflation, but inflation is to pick up in the coming months and should increase further in 2017-18.
Further, Draghi said the ECB did not discuss extending QE at this meeting. He also volunteered that the governing council didn't discuss tapering. Yet Draghi said an abrupt ending to bond purchases is unlikely and the ECB has not discussed if rates can be cut further. He said bond scarcity is not a problem right now, but the issue took much of the discussion.
Meanwhile, the German stock index DAX Index traded 0.77 percent higher at 10,792.50 by 09:30 GMT.
