Gold Hits 2-Week High on China Buying, Fed Rate Cut Expectations
Gold prices hit two-week highs on Monday, climbing more than 1% on renewed buying of the metal by China's central bank following a six-month hiatus, with bullishness increased by anticipation of a U.S. Federal Reserve interest rate cut next week.
Spot gold gained 1.1% to $2,662.98 per ounce, as of 01:41 p.m. ET (1841 GMT). U.S. gold futures settled 1% higher at $2,685.50.
"The most important factor is news that People's Bank of China reported that it again resumed its gold purchases ... the market is getting hopeful that we could see other central banks follow suit and we could see a resumption of record territory buying," said Bart Melek, head of commodity strategies at TD Securities.
The resumption of Chinese buying may support investor demand in the country. In 2023, China was the world's largest official sector buyer of gold, but the PBOC paused its 18-month buying streak in May.
Robust central bank buying has played a major part in supporting gold's record rally this year, alongside monetary policy easing and geopolitical tensions.
The U.S. Fed started its interest rate easing cycle with an unusually large 50 basis point cut in September, followed by a 25bp cut in November. Traders are pricing an 86% chance of another quarter-percentage-point rate cut from the central bank at its Dec. 17-18 meeting.
Source : Reuters
