Gold rises B150 on China rate cut

Gold prices climbed 150 baht at its opening at 9.18am on Saturday.

The Gold Traders Association announced the buying price at 18,550 baht and the selling price at 18,650 baht per baht-weight for gold bars.

The buying price for gold ornaments was 18,282.96 while their selling price was 19,050 baht per baht-weight.

The prices were adjusted four times on Friday, ending with a total gain of 50 baht per baht weight from Thursday's close.  

In world markets, gold futures rose to three-week highs after China cut benchmark interest rates to support economic growth, boosting demand for precious metals as a store of value, according to Bloomberg.

The rate reduction was the first since July 2012 as the Asian nation heads toward its slowest full-year expansion in almost a quarter century. Russia added to gold reserves in October, bringing holdings to the highest in at least two decades, International Monetary Fund data showed.

The metal has climbed 6% after touching a four-year low on Nov 7 amid increased demand for coins and jewellery, combined with signs that nations are boosting reserves. Central banks may raise purchases by as much as 22% in 2014, the World Gold Council estimates.

“People will buy gold as a hedge, since it is clear that China wants to stimulate growth,” Miguel Perez-Santalla, a sales and marketing manager at Heraeus Metals New York, tolf Bloomberg. “Also, we are seeing a rise in physical demand.”

Gold futures for December delivery climbed 0.6% to settle at $1,197.70 an ounce at 1.36pm on the Comex in New York. Earlier, the price reached $1,207.60, the highest for a most-active contract since Oct 30. The metal rose 1% this week.

Aggregate trading was 56% above the 100-day average for this time of day, data compiled by Bloomberg show. Open interest at an estimated 468,051 contracts was the highest in two years.

Switzerland was a net exporter of gold in October for the first time this year, data showed yesterday.

Gold climbed 70% from December 2008 to June 2011 as the Federal Reserve bought debt and held US borrowing costs near zero percent in a bid to shore up economic growth. Buying accelerated after the financial crisis spurred global central banks to increase money supplies.

In 2014, gold has dropped 0.4%. The metal in 2013 tumbled 28%, ending a 12-year bull run. A second straight annual drop would mark the longest slump since 1998.

Yesterday, global holdings in exchange-traded products backed by gold fell 2.1 tonnes to 1,614.7 tonnes, extending a slump to the lowest in more than five years, according to Bloomberg data.