Gold hits 2-week high as China rate cut seen spurring buying
London (Mar 2) Gold rose to its highest level in nearly two weeks on Monday, shrugging off the dollar's multi-year high after an interest rate cut in Beijing lifted
demand in China, the world's second largest gold market.
Weakness in Chinese manufacturing, aggravated by high real borrowing costs and weak demand, appears to have driven the central bank to accelerate the pace of monetary easing.
"Anything that helps stimulate consumer spending is gold favourable because there are more chances of higher purchases of consumer jewellery and gold bars," Mitsubishi Corp strategist
Jonathan Butler said.
Spot gold rose to its highest level since Feb. 17 at $1,223.20 an ounce in earlier trade and was up 0.3 percent at$1,216.65 by 1034 GMT. It fell 5.5 percent in February in its biggest monthly loss since September on expectations of an early U.S. rate increase, but was up almost 3 percent for the year.
The dollar edged 0.1 percent lower against a basket of
leading currencies, but remained close to an earlier 11-year
high, helped by the Chinese rate cut.
"We do not rule out another 25 bps rate cut alongside
further RRR (reserve requirement ratio) easing in the next 3-6
months if oil prices stabilise and food inflation remains under
wraps," Mizuho Bank said in a note.
The next focus for the market is Friday's U.S. non-farm
payrolls data and next week's launch of outright money-printing
by the European Central Bank.
Comments last week from Federal Reserve officials that the
central bank might end its near zero interest rate policy sooner
than some expected were pushed into the background by lower than
expected U.S. growth data.
Premiums for physical gold at the Shanghai Gold Exchange
stayed firm at around $4-$5 an ounce over the global spot
benchmark on Monday.
China's gold imports should rise this year after falling to
813.13 tonnes in 2014 from record highs above 1,150 tonnes a
year earlier, said Howie Lee, an investment analyst at Phillip
Futures in Singapore.
Top buyer India will introduce gold deposit accounts to
utilise the 20,000 tonnes available within the country and
launch a sovereign gold bond, but it kept the import duty at a
record 10 percent in a setback for jewellers.
Spot silver was unchanged at $16.60 an ounce.
Palladium fell 0.2 percent to $813.55 an ounce and
platinum was down 0.4 percent at $1,179.25 an ounce.
Source: Reuters
