Forexpros – Gold futures were steady on Thursday, following the previous day’s rally that took prices to a two-week high after a coordinated effort by major central banks to improve liquidity in financial markets sparked a rally in risk-sensitive assets.
On the Comex division of the New York Mercantile Exchange, gold futures for February delivery traded at USD1,748.95 a troy ounce during early European morning trade, easing down 0.08%.
The February contract traded between a range of USD1,745.35 a troy ounce, the daily low and USD1,754.25, the daily high and the highest since November 17.
Gold futures were likely to find support at USD1,700.50 a troy ounce, the previous day’s low and resistance at USD1,766.95, the high of November 17.
Prices rallied nearly 2% on Wednesday after six major central banks, including the Federal Reserve and the European Central Bank agreed on Wednesday to lower dollar swap rates to prevent a lack of liquidity in the global financial system.
The surprise announcement came after the People’s Bank of China said that it plans to cut banks reserve requirement ratios by 0.5%, in an effort to help boost liquidity and support the world’s second largest economy amid global market turmoil.
French financial service provider Societe Generale said in a report earlier that it remains “bullish” on gold in the long-term, citing the “aggressive monetary policy” needed to resolve the euro zone’s ongoing debt crisis.
It added however that gold was “unlikely to set new highs as trading activity slows ahead of the year-end, with traders booking profits and moving to the sidelines before the holidays”.
“We wouldn’t be surprised that we don’t see much strength towards the end of the year, but into 2012 we should see aggressive monetary policy being reflected in prices of gold,” the bank said.
Gold can benefit from such an environment of easy money because of expectations that ample liquidity would put a damper on the value of paper currencies.
Elsewhere on the Comex, silver for March delivery slumped 0.55% to trade at USD32.62 a troy ounce, while copper for March delivery tumbled 1.25% to trade at USD3.531 a pound.
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