Investing.com – Gold prices rallied to a three-week high on
Friday, after China’s central bank unexpectedly cut interest rates
for the first time in more than two years.
On the Comex division of the New York Mercantile Exchange, gold
futures for December delivery rose to a session high of $1,207.60 a
troy ounce, the most since October 30, before settling at $1,197.70
by close of trade, up $6.80, or 0.57%.
On the week,
rose $12.10, or 1.01%, the second consecutive weekly gain.
Futures were likely to find support at $1,173.90, the low from
November 19, and resistance at $1,216.50, the high from October 30.
Gold prices rose on news that the People’s Bank of China cut its
benchmark one-year deposit rate by 25 basis points to 2.75% and
trimmed its one-year lending rate by 40 basis points to 5.6%.
The move came in response to recent signs of a slowdown in the
world’s second-largest economy.
Gold can benefit from such an environment of easy money because of
expectations that ample liquidity would put a damper on the value
of paper currencies.
Meanwhile, European Central Bank President Mario Draghi reiterated
on Friday that the central bank is ready to expand its stimulus
program to raise inflation and inflation expectations as quickly as
Draghi also warned about weak growth in the euro zone, saying that
no improvements are expected in the coming months.
The ECB’s current stimulus program includes purchases of
asset-backed securities and covered bonds, though markets are
keeping a close eye out for plans to