Gold extends gains after China cut reserve requirement rate

New York (Feb 4)  Gold prices extended gains to trade above the 50-week average located at USD 1266.25/Oz levels after China announced a cut in its reserve requirement rate.

Gold benefits as central bankers announce back to back rate cuts

The yellow metal has been a major beneficiary of the ongoing race for a looser monetary policy among central bankers across the globe. The metal extended gains to hit a session high of USD 1271.90/Oz after the People’s Bank of China reduced the reserve requirement ratio to 19.5% from 20.0%. Romania also cut its benchmark interest rates to record lows in order to battle the falling inflation.

Meanwhile, the weakness in the European equity markets continues to support the yellow metal. The metal may further extend gains as weak crude prices are pushing the US index futures and Treasury yields lower.

Gold Technical Levels

The metal currently trades 0.68% higher at USD 1268.10/Oz levels. The immediate resistance is seen at 1273.38 (5-DMA), above which gains could be extended to 1278.37 (10-DMA). Meanwhile, support is seen at 1266.25 (50-WMA) and 1256.4 levels.