The gold price rose in early morning London trading, taking support from more uncertainty surrounding central bank policies, although gains were capped after political leaders agreed a ceasefire in Ukraine.
Spot gold was last $4.20 higher at $1,224.00/1,224.80 – it has traded in an intraday range of $15 so far. Silver followed gold slightly higher to $16.84/16.89, up five cents.
The metal peaking at $1,233.10 earlier in the session after the Bank of Japan (BoJ) quashed hopes of further monetary easing by labelling it counterproductive and Sweden’s Central Bank, the Riksbank, cut interest rates by 10 basis points -0.1 percent to counteract the country’s spiralling deflation problem.
The rate will remain at -0.10 percent until inflation is close to the bank’s target of two percent, which is on the slate for late next year, the bank said. It will also buy government bonds amounting to 10 billion Kroner.
“Gold ran up on reports that the BoJ had said extra stimulus was probably counter productive for now, which bolstered the yen to around 118.80 from around 120.30 in minutes. Then the Swedish rate cut added extra oomph,” FastMarkets analyst William Adams said.
“But gold then corrected on news that a ceasefire in Ukraine had been agreed. So the market is now having to adjust to both bullish and bearish news, while the Greece situation remains uncertain,” he added.
Despite earlier reports of difficulties prompted by unacceptable demands from Russian President Vladimir Putin, which Russian news agencies have said relates to the demilitarised zone between the two sides, political leaders have agreed a new ceasefire agreement in Ukraine, following an all-night meeting in Minsk.
This brings an end to months of fighting, which will dampen gold’s appeal as a source of safe-haven investment in the near term.
Elsewhere In Europe, an agreement has yet to be reached in Brussels over Greece’s debt crisis, although both sides have still hope to reach a compromise. According to unconfirmed reports overnight, German Finance Minister Martin Jager has said Germany may be willing to take into account some of Athens’ demands for changes to the emergency funding programme
In data today, the German final CPI at -1.1 percent was lower than expected and lower for the third consecutive month.
Still to come are industrial production numbers from the eurozone as well as US weekly unemployment claims, retail sales and business inventories.
In the other precious metals, platinum was up $4 at $1,193/1,203 per ounce, while palladium was $7 higher at $770/776.
(Editing by Mark Shaw)
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