Gold jumps above 1% on China rate cut

February 29, 2016

The ongoing recovery in the gold Comex futures found fresh legs after the Chinese central announcement a cut in its reserve requirement ratio (RRR).

Gold bolstered by more China stimulus

Currently, gold trades 1.18% higher at 1234.80, retreating slightly from fresh session highs printed at 1236.10 some minutes ago. The precious metal jumped nearly $ 4 after the Chinese central bank slashed the RRR by 0.5% in a bid to stimulate economic growth, which would in turn lift the demand for the bullion. China is the world’s largest gold consumer.

Moreover, the prices remain underpinned on the back of the sharp declines seen in the European equities, triggered by risk-aversion on China stocks sell-off. Meanwhile, the greenback appears to have regained momentum and now rises 0.07% against its major peers, as reflected by the USD index.

Focus now shifts towards the US economic data ahead of the crucial Chinese manufacturing PMI reports due tomorrow.

Gold Technical Levels

The metal has an immediate resistance at 1239.10 (Feb 26 High) and 1250 (psychological levels). Meanwhile, the support stands at 1223/22 (1h 200-SMA/ 200-DMA) below which doors could open for 1218.60 (20-DMA). 

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