Gold retains gains, firm above $1,200 on China rate cut

Tuesday, 25 November 2014 01:02 - - {{hitsCtrl.values.hits}}

SINGAPORE (Reuters): Gold traded firmly above $1,200 an ounce on Monday, retaining gains from the previous session on hopes that a surprise rate cut in China would boost demand for bullion in the top consumer.

Spot gold was steady at $1,202.20 an ounce by 0028 GMT, after gaining 0.6% on Friday. Gold got a boost from short-covering after China cut interest rates unexpectedly on Friday, stepping up efforts to support the world’s second-biggest economy as it heads towards its slowest expansion in nearly a quarter of a century, saddled under a mountain of debt. China’s leadership and central bank are ready to cut interest rates again and also loosen lending restrictions, concerned that falling prices could trigger a surge in debt defaults, business failures and job losses, said sources involved in policy-making. Bullion also got support from comments from European Central Bank President Mario Draghi that opened the door for more drastic measures to prevent the euro zone from sliding into deflation.