Gold Price News: Gold Climbs to Two-Week High

Gold prices made solid gains on Tuesday, rising for a second day, after China announced a looser approach to monetary policy that could involve lowering interest rates.

Prices rose as high as $2,696 an ounce on Tuesday – their highest since November 25^th. That compared with around $2,660 an ounce in late deals on Monday.

Gold took support from news on Monday that China plans to loosen its stance on monetary policy for the first time in 14 years. The prospect of lower borrowing costs in China follows a monetary stimulus in September and fiscal measures in November which sought to boost economic conditions in the country.

Chinese central bank buying gold again

Boosting gold even further, the People’s Bank of China has resumed gold purchases after a six-month pause, according to news reports this week. A return to buying by China’s central bank is undoubtedly bullish for the precious metal, which has made extraordinary gains in recent years that were partly driven by central bank demand.

Geopolitical tensions continue to be a wildcard factor for gold, with eyes on Syria after the recent collapse of the government headed by former President Bashar al-Assad. This has increased uncertainty over the future stability of the country, supporting interest in gold due to its safe-haven appeal.

Upcoming events

Looking ahead, the markets will be watching out for the US inflation data for November due out on Wednesday, as traders look ahead to an expected interest rate cut by the US Fed on December 18^th. The Bank of Canada is set to make an interest rate decision on Wednesday, with the markets expecting a 50 basis-point cut to 3.25%. Then it will be the European Central Bank’s turn on Thursday, with the markets expecting a 25 basis-point cut to 3.15%. Thursday will also bring the latest updates on monthly US producer price inflation and weekly initial jobless claims figures.