Forexpros – Gold futures added to gains on Thursday, rallying to a six-week high after the European Central Bank unexpectedly cut its benchmark interest rate.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,764.05 a troy ounce during European afternoon trade, rallying 1.99%.
It earlier rose by as much as 2.1% to trade at USD1,765.85 a troy ounce.
Gold prices traded at USD1,752.55 a troy ounce prior to the ECB announcement.
The ECB said it cut the benchmark interest rate to 1.25% from 1.50%. Analysts had expected the ECB to keep rates unchanged at 1.50%.
ECB president Mario Draghi, who chaired his first interest rate meeting as ECB chief, was to comment on the decision at a press conference later in the day.
Lower interest rates can give gold a lift, as it decreases the relative cost of holding on to the metal, which doesn’t offer investors any similar guaranteed payout.
Meanwhile, gold traders continued to eye development out of Greece. Greek Finance Minister Evangelos Venizelos said earlier that he was opposed to the planned referendum. Meanwhile, speculation that the vote could be cancelled mounted, ahead of a vote of confidence in Prime Minister George Papandreou’s government on Friday.
Gold is often seen as an alternative currency in times of global economic uncertainty and a refuge from financial risk.
Elsewhere on the Comex, silver for December delivery surged 2.6% to trade at USD34.82 a troy ounce, while copper for December delivery edged 0.2% higher to trade at USD3.588 a pound.
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