Gold was largely unchanged during early trading on Monday despite aggressive easing measures out of China over the weekend.
The spot gold price was last at $1,204.50/1,205.30 per ounce, up $1.20 on the pre-weekend close and having traded in a tight $4 intraday range so far.
“The weaker dollar has provided some lift but, as in the base metals, the higher prices seem to be attracting some selling; weaker equity markets on Friday also led to some risk reduction too,” FastMarkets analyst William Adams said.
“Broad-based risk reduction could initially weigh on precious metals but a secondary reaction could be bullish for the gold price if safe-haven buying picks-up,” he added.
The bullion market has so far been largely shrugged off the People’s Bank of China’s cut its reserve requirement ratio (RRR) by 19.5 percent to 18.5 percent for the country’s largest banks – the second such move this year and further evidence of the leadership’s concerns over the slowing economy.
The cut is expected to open up 1.2 trillion-1.4 trillion yuan of funds for lending for the larger institutions though the PBoC also lowered the ratio by another 50 basis points for the small and medium-sized banks that lend to agricultural borrowers and micro businesses, which should release an additional 300 billion yuan in funds, analysts suggested.
Elsewhere, with the dollar fairly unchanged at 1.0790 against the euro and a quiet day of data ahead, market participants will instead look to the key Hindu festival of Akshaya Tritiya in India on Tuesday, which is widely regarded to be the most auspicious day in the country’s calendar to buy gold and could prove key to near-term direction.
While Indian import figures of a rumoured 125 tonnes in March may weigh on premiums, good demand should add some near-term support for gold in the coming sessions, although demand is subdued so far, according to local reports.
The situation in Greece also remains unstable – the country has yet to provide the list of comprehensive reforms that may well secure it crucial funding and avert default.
The Greek Finance Ministry has said that the country’s cash balance will be negative from April 20 – it needs $2.16 billion to pay public sector wages this month though it must also pay back the IMF on 12 May around 1 billion euros.
Eurozone finance ministers are set to meet on Friday in Latvia; any further signs that deal might not being reached will raise the prospect of a Greek exit – or ‘Grexit’ from the bloc.
In the other metals, silver was last seven cents higher at $16.29/16.34 per ounce, while palladium was up $5 at $782/787, as was platinum at $1,167/1,172.
(Editing by Mark Shaw)
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