Gold gains on Chinese rate cut
Published Nov 21, 2014 02:20PM ET
China rate cut sends gold prices rising
Investing.com - Gold prices jumped up on Friday on news that China had cut interest rates, which sparked safe-haven demand for the precious metal.
Gold often serves as a hedge to sliding currencies, the product of loose monetary policy.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery were up 0.50% at $1,196.80, up from a session low of $1,186.30 and off a high of $1,207.10.
The December contract settled down 0.25% at $1,190.90 on Thursday.
Futures were likely to find support at $1,173.90 a troy ounce, Wednesday's low, and resistance at $1,235.50, the high from Oct. 28.
Gold prices rose on news that China cut its benchmark one-year deposit rate by 25 basis points to 2.75% and trimmed its one-year lending rate by 40 basis points to 5.6% to boost its economy.
The news helped offset dovish comments from European Central Bank President Mario Draghi, which strengthened the dollar.
Gold and the dollar tend to trade inversely with one another.
Draghi reiterated on Friday that the central bank is prepared to act rapidly if low inflation persists.
Draghi also expressed concerns over the euro zone's weak growth, pointing out he saw no improvements in the coming months, which fueled demand for the greenback as the euro slid.
The ECB head was speaking at the 24th European Banking Congress "Reshaping Europe," in Frankfurt, and his comments sparked expectations for fresh stimulus.
The ECB's current stimulus program includes purchases of asset-backed securities and covered bonds, though markets are keeping a close eye out for plans to announce purchases of government debt, a stimulus tool known as quantitative easing.
Elsewhere, silver for December delivery was up 1.35% at $16.355 a troy ounce, while copper futures for December delivery were up 0.42% at $3.032 a pound.
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Written By: Investing.com
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