By Moming Zhou, MarketWatch NEW YORK (MarketWatch) -- Gold futures rose Thursday as demand for the precious metal as a hedge against inflation increased after major European central banks cut their interest rates. Gold for December delivery rose $15.60, or 2.1%, to $758 an ounce on the Comex division of the New York Mercantile Exchange. Gold is now about 8% higher than the 13-month low below $700 hit on Oct. 23, but it's still 25% lower than the record high above $1,000 hit in March. The Bank of England took drastic action earlier Thursday, slashing its key interest rate to 3% from 4.5% previously. The European Central Bank, which sets monetary policy for the 15-nation euro zone, and the Swiss National Bank also moved to cut rates by smaller amounts. See related story. "With the Bank of England and the ECB cutting interest rates, central banks are attempting to inflate their way out of a deflationary slump," said Mark O'Byrne, executive director at Gold & Silver Investments. Gold is often seen as a hedge against rising prices. Last week, the Federal Reserve cut key interest rates by half a percentage point, to 1%. After Thursday's rate cuts in Europe, the U.S. dollar was rising against the euro but falling against the British pound. See Currencies. In gold spot trading, the London gold-fixing price -- used as a benchmark for gold for immediate delivery -- stood at $739 an ounce Thursday morning local time, down $14.75 from Wednesday afternoon. Gold in the SPDR Gold Trust , the largest gold exchange-traded fund, remained at 749.21 tons Wednesday, unchanged since Oct. 27, according to the latest data from the fund. Gold held by the fund hit a record high of 770.64 tons on Oct. 10. In other early metals trading, December copper fell 1.6% to $1.7905 a pound. December silver gained 2.6% to $10.725 an ounce. December palladium jumped 8% to $236.50 an ounce, while January platinum eased 0.3% to $877.80 an ounce.

Source