Gold futures finished moderately higher Thursday after the Bank of England announced a rate cut for the first time since 2009 and unveiled a batch of stimulus measures aimed at stimulating the country’s economy in the wake of the June 23 vote to exit the European Union.
December gold GCZ6, -0.01% rose $2.70, or 0.2%, to settle at $1,367.40 an ounce.
The BOE cut its key lending rate by a quarter of a percentage point to 0.25% and unfurled a mix of measures, including reviving its bond-buying program. Although the rate cut was expected, the additional stimulus measures surprised the market, and providing a jolt to haven assets.
This, coupled with easing measures from the Bank of Japan earlier in the week, are being viewed as supportive to the long-term outlook for gold prices.
U.S. gold futures for December delivery settled 0.3% higher overnight at US$1369 an ounce.
The UK central bank reduced its main interest rate by 25 basis points to 0.25%, their lowest since 1694 and the first change since March 2009.
There was also a further £60bn added to the bank’s bond purchase program.
Looser monetary policy was cited yesterday by the World Gold Council as a reason for the surge in investment demand this year that has helped push the metal back up to three-year highs.
Some commentators suggest this may mean gold going as high as US$1,800 an ounce, but there was a voice of caution today in the shape of RBC.
Technically, December gold futures prices closed nearer the session high. The gold bulls have the firm overall near-term technical advantage. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the July high of $1,384.80. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at this week’s low of $1,353.20. First resistance is seen at this week’s high of $1,374.20 and then at $1,380.00. First support is seen at $1,360.00 and then at this week’s low of $1,353.20. Wyckoff’s Market Rating: 7.0
Reference: Kitco, Market Watch, Proactiveinvestors
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