The gold price got a modest lift on Wednesday from news that the People’s Bank of China (PBoC) cut lending rates in an attempt to support sagging growth.
Gold for April delivery on the Comex division of the New York Mercantile Exchange was last up $7.50 at $1,267.80 per ounce. On Tuesday, the yellow-metal fell by $16.50 following reports that some progress was made in Greek debt talks.
The PBoC this morning lowered its reserve ratio by 0.5 percentage points to 19.5 percent, which should result in new liquidity for the banking system.
Central banks across the world are increasingly loosening monetary policy to fight slowing growth and a lack of inflation. The PBoC is the 16th central bank to act in the face of deflationary pressures so far this year.
“This move was pretty well telegraphed, in fact it was inevitable given the flow [of weak data],” a US-based metals trader said. “While I don’t think this leads to a big rally, it should at least halt the slide.”
China’s GDP grew at just 7.4 percent in 2014, which is not only is below that government’s 7.5 percent target but was also the slowest pace in 24 years.
The country’s January HSBC services PMI, meanwhile, dropped to 51.8 from 53.4 in December, while the composite PMI read fell by 0.4 points to 51.0.
Elsewhere, investor concerns over Greece’s bailout programme eased after new finance minister Yanis Varoufakis proposed that the country swap its outstanding government debt with international creditors for growth-linked or perpetual bonds.
Varoufakis will meet ECB president Mario Draghi today to persuade him that reducing the terms of Greece’s repayments is in the best interests of all parties, while also calling for the end of the Troika.
“The general feeling in Europe is that some form of compromise can be achieved with Greece, which should keep them in the eurozone, hence the rally in the currency,” Marex Spectron’s David Govett said. “However, as we have seen many times recently, all this can change in the blink of an eye and as such, I would say that gold will stay in its range.”
In the wider-markets, the euro touched 1.1492 against the dollar on Tuesday, its highest since January 22, but has since pulled back a little to 1.1451.
Light sweet crude (WTI) oil futures on the Nymex were last down $1.35, or 2.56 percent, at $51.69 per per barrel, but on Tuesday crude spiked by over eight percent on reports of near-term supply cuts.
In equities, Germany’s DAX and France’s CAC-40 were down 0.29 percent and 0.10 percent respectively, while in Asia the Nikkei and Hang Seng ended up 1.98 percent and 0.51 percent.
As for the other precious metals, Comex silver for March delivery were up 5.4 cents at $17.375 per ounce. Trade has ranged from $17.170 to $17.550.
Platinum futures for April delivery on the Nymex were up $7.20 at $1,242.40 per ounce, while the most-actively traded palladium contract was at $791.95 per ounce, up $5.95.
Meanwhile, data from the Eurozone was mostly positive. The Spanish and Italian services PMIs at 51.2 and 52.7 respectively beat expectations. The EU final services PMI was positive at 57.2, as were retail sales at 0.3 percent.
Here in the US, payroll processor ADP said that the US added 213,000 jobs in January, which was below the 224,000 forecast but is still a fairly strong reading.
“Employment posted another solid gain in January, although the pace of growth is slower than in recent months,” Mark Zandi, chief economist of Moody’s Analytics, said.
“Businesses in the energy and supplying industries are already scaling back payrolls in reaction to the collapse in oil prices, while industries benefiting from the lower prices have been slower to increase their hiring. All indications are that the job market will continue to improve in 2015,” Zandi added.
(Additional reporting by Ian Walker)
The post Gold price bounces on China bank rate haircut appeared first on The Bullion Desk.
No comments:
Post a Comment