Gold and silver climb ahead of Euro zone debt negotiations
Precious metals continued to hold ground this morning as investors monitored the ongoing debt negotiations between Greek and Euro zone officials. Gold prices have climbed more than half a percent after moves by China's central bank to ease policy buoyed positive sentiment, and hopes for Greece to seal a bailout deal at a meeting with euro zone officials later in the day.
An easing monetary stance boosts sentiment in gold by raising the inflation outlook down the road and attracting investors to bullion, a good hedge against inflation. China cut its required reserve ratio over the weekend, joining a number of central banks in relaxing monetary policies to promote economic growth while the euro zone debt crisis continues to overhang the global economy.
The optimism on a deal later in the day between Greece and euro zone on the second bailout for Greece sent equities and the euro up, helping support gold. "There is the expectation that everyone is going to relax monetary policy, which will be good for stocks and commodities, “said Ronald Leung, a physical dealer with Lee Cheong Precious Metals in Hong Kong.
Technical analysis suggested that spot gold could rise to$1,747 an ounce during the day, said Reuters market analyst Wang Tao.
CAUGHT IN A RANGE
Gold has been caught in a range between $1,700 and $1,760since the beginning of February, as investors watch Greece grind towards a deal with its international lenders on tough reforms and austerity measures in exchange for a 130-billion-eurobailout.
"Gold is searching for its next catalyst and has been caught between healthy, albeit slower, investment demand and some support from the physical market," said Barclays Capital in a research note.
For more on metals click on the links below;
Gold to average $1,800 in Q2; silver at $34: Deutsche Bank
Copper Snaps Six-Day Drop After China Cuts Reserve Ratio: Shanghai Mover
China central bank in gold-buying push
China's might drives the demand for gold
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