Gold settles higher after China cuts reserve ratio...silver and copper also gain
San Francisco (Feb 4) Gold and other metals prices settled higher on Wednesday, getting a boost from the Chinese central bank’s decision to cut the reserve-requirement ratio for banks in an aim to boost growth.
Gold for April delivery GCJ5, +0.33% added $4.20, or 0.3%, to settle at $1,264.50 an ounce after falling by more than $16 on Tuesday. March silver SIH5, -0.01% rose more than 7 cents, or 0.4%, to end at $17.395 an ounce.
“Gold remains choppy but is mostly backing and filling as risk on/risk off sentiment ebbs and flows in the market,” Kevin Kerr, president of Kerr Trading International, wrote in emailed comments. “Gold is not ready to shine super brightly yet in 2015, but there are a lot of economic bombshells on the horizon which could drive investors to diversify better using gold.”
“We expect gold to ease more this week, on profit-taking primarily, as well as a sigh of relief by many traders,” Kerr added. “That may all be very different next week.”
On Tuesday, gold’s appeal as a safe-haven faded with Greece taking a much more accommodating stance on its standoff with the European Union on repayment of debt.
But on Wednesday, appetite for the metal returned as China took a major step to boost bank lending and beefing up the economy, by cutting the required amount of cash that banks set aside for reserves. The ratio was cut by 50 basis points to 19.5%, theoretically freeing up more money for the banks to pass on to businesses.
Metal prices tend to rise on growth-boosting measures from China as the country, one the world’s largest economies, is a major user of natural resources.
Elsewhere in metals trading, platinum for April delivery PLJ5, +0.24% climbed $3.70, or 0.3%, to settle at $1,238.90 an ounce, while March palladium PAH5, +0.77% rose $4.20, or 0.5%, to end at $790.20 an ounce.
High-grade copper for March delivery HGH5, +0.37% rose about a penny to $2.59 a pound.