Forexpros – Gold prices rose in Asian trading early Monday after China cut the reserve requirements for its banks, which sparked a risk-on trading session that saw the dollar falling and its traditional hedge, gold, rising.
On the Comex division of the New York Mercantile Exchange, gold futures for April delivery traded at USD1,738.05 a troy ounce, up 0.70%.
Gold futures were likely to test support at USD1,706.85 a troy ounce, Thursday’s low, and resistance at USD1,739.15, Wednesday’s high.
The People’s Bank of China moved to slash reserve requirements for its banks in an effort to fuel more economic growth at home.
The move sparked demand for riskier assets worldwide, which included gold.
Furthermore, public statements from European financial leaders suggesting they would grant Greece access to EUR130 billion in bailout money later Monday sparked even more demand for the yellow metal.
Bullish comments from widely followed hedge fund manager John Paulson that he liked gold also fueled demand.
John Paulson advised investors to go long on the precious metal to protect themselves against inflationary pressures.
“By the time inflation becomes evident, gold prices will probably have moved, which implies now is the time to build a position in gold,” Paulson said.
Demand for the precious metal has been on the rise.
The World Gold Council reported last week that global demand for metal reached 4,067.1 tonnes last year, the highest tonnage since 1997, thanks in part to central banks diversifying their reserves by adding more hard assets as well as to demand in capital markets.
Elsewhere on the Comex, silver for March delivery was up 1.20% and trading at USD33.613 a troy ounce, while copper for March delivery was up 1.92% and trading at USD3.792 a pound.
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