Gold prices declined as the People’s Bank of China (PBoC) cut lending rates, which lent some stability to equity markets.
Gold for December delivery on the Comex division on the New York Mercantile Exchange was last down $14.70 or 1.3 percent to $1,138.90 per ounce. Trade has ranged from $1,134.0 to $1,156.30.
Overnight, the PBoC lowered lending rates by 25 basis points to 4.6 percent, the fifth such cut since November.
After repeated attempts to slowdown or outright halt selling on its various equity markets, the bank has seemingly capitulated to the bears by switching to a more traditional strategy of settling markets.
The rate cut, however, did little to clam the Shanghai Composite Index, which fell by falling by 7.6 percent.
China is in the midst of transitioning from an investment-minded economy to one that is driven by services and consumerism.
US equities responded favorably with the Dow Jones industrial average and S&P jumping 1.6 percent and 1.5 percent respectively, while the dollar was 1.6 percent stronger at $1.1434 against the euro.
“Gold has typically found some strange short term ‘safe haven’ bids that have already been flushed out, with more pressure possible today should equities find a bid,” Triland Metals said. “It is common for gold to find a knee-jerk bid in periods of fear – but then it is also common that this bid does not hold too long as it remains a risk trade like all else.”
Meanwhile, inflows into gold ETFs continued – holdings in the funds tracked by FastMarkets have increased to 1,536.95 tonnes.
In US data, S&P/CS Composite-20 HPI year-over-year was up 5 percent, near the forecast of 5.1 percent, while HPI month-over-month was at 0.2 percent, below the estimate of 0.4 percent.
New home sales stood at 507,000, near the 512,000 consensus.
Additionally, consumer confidence was 101.5, above the prediction of 92.8, while flash services PMI was 55.2, besting the predictions of 54.1, but below the previous reading of 55.7
As for the other precious metals, Comex silver for September delivery was last down 14.2 cents at $14.620 per ounce. Trade has ranged from $14.520 to $14.930.
Platinum for October delivery on the Nymex declined $13.90 to $977.60 per ounce, while the most-actively traded palladium contract was at $538.45 per ounce, down $36.60.
(Editing by Tom Jennemann)
The post Gold dips, Chinese rate cut boosts equities appeared first on The Bullion Desk.
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