Gold Rises on Chinese Interest Rate Cuts

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Gold Rises on Chinese Interest Rate Cuts

Gold and silver futures climbed to highs of three weeks after the benchmark interest rate cuts by China, supporting economic growth and boosting demand for precious metals as store of value.

The reduction rate is the first since Jul. 2012 as the nation is on track towards its slowest year in about 25 years.

After touching a low of four years on November 7, the metal has gained 6% amid the increase in demand for jewelry and coins. Central banks might increase purchases by around 22% in 2014.

Bloomberg quoted sales and marketing manager at Heraeus Metals, Miguel Perez-Santalla as having said, “People will buy gold as a hedge, since it is clear that China wants to stimulate growth. Also, we are seeing a rise in physical demand.”

Precious metal analyst at UBS AG, Joni Teves said, “An accommodative policy is generally friendly to gold. China’s gross domestic product in recent years has coincided with growth in demand for gold.”

Switzerland was one of gold’s net exporters in October, the first time this year, according to data.

According to Nasdaq, December delivery gold futures on the New York Mercantile Exchange rose 0.5% at $1,196.80 up from the session low of $1,186.30 off the high of $1,207.10.

The December contract was down 0.25% at $1,190.90 on Thursday.

Gold rose 70% from Dec 2008 to Jun 2011 with the Federal Reserve having bough debt and holding the borrowing costs of the US to near zero percent in an attempt to raise economic growth.

March delivery silver futures climbed 1.6% to $16,459 per ounce. Earlier, this price had reached $16.66, the highest level since October 30.

Palladium futures for December delivery increased 3.6% to $794.90 per ounce, the largest gain from September 19 2013.

January delivery platinum futures climbed 1.8% to $1,227,30 per ounce, the biggest advance since October 6.

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To contact the reporter of this story; Jonathan Millet at john@forexminute.com