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Precious Metals Market Report: Gold gains 0.6% on PBOC, ECB easing – November 21, 2014

Precious Metals Market Report by Bill Musgrave – American Gold Exchange


Gold gained 0.6% to close just under $1,198 after a surprise rate cut by the People’s Bank of China and new asset purchases by the European Central Bank stoked demand for hedges against currency devaluation.

China reduced interest rates for the first time in more two years in hopes of stimulating its faltering economy. Retail sales, factory output, and exports all slowed in October, and the government is becoming increasingly nervous that it may miss annual growth targets for the first time since the late 1990s. Deeper stimulus in China is expected to fuel demand for commodities, which would be bullish for precious metals.

After reaching a three-week high of $1,205 early in the session, gold fell back under resistance at $1,200 on profit-taking, but still finished 1% higher for the week. It has now rebounded by 6% in the past two weeks, driven by stronger physical demand for coins and jewelry, especially in Asia, and sustained purchases by central banks.

The ECB also launched aggressive easing today, buying asset-backed securities for the first time as it expands quantitative easing in an effort to stimulate inflation in the Eurozone. Mario Draghi reiterated that the central bank is also ready to “step up the pressure” further by purchasing government bonds. With the Europe and China joining Japan in expanding monetary easing, three of the world’s four largest economies are more deeply committed to policies that diminish the value of their currencies.

The other precious metals outpaced gold’s gains. Silver jumped 1.6% and platinum added 1.8% while palladium surged 3.6% for its biggest one-day rise in fourteen months.

At the Comex close: December gold gained $12.10 to $1,197.70; December silver jumped 26 cents to $16.40; January platinum added $21.70, to $1,227.30; and December palladium $27.75 to $794.90.

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