MW: Gold rises as Bank of England unveils stimulus measures
Gold futures climbed Thursday as the Bank of England cut interest rates and unleashed a new round of asset purchases to stem concerns about the aftermath of the U.K.’s decision to exit the European Union.
The central bank cut its key lending rate by a quarter of a percentage point to 0.25% and unfurled a mix of measures, including reviving its bond-buying program, to help stimulate the country’s economy in the wake of the June 23 vote to exit the European Union. Although the rate cut was expected, the additional stimulus measures surprised the market.
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December gold GCZ6, +0.28% rose $5.30, or 0.4%, to $1,370.10 an ounce, following a downbeat day for the metals complex. The yellow metal rose even as the dollar was climbing, up 0.1%, putting pressure on commodities priced in the currency.
“Gold rising in dollar terms shows how dramatic this action from the U.K. central-bank is,” said Adrian Ash, head of research at metals broker BullionVault.
Gains for gold gathered momentum after jobless claims, although remaining at relatively low levels historically, rose to the highest level since the end of June. Claims rose 3,000 to 269,000, still below average analysts expectations polled by MarketWatch.
However, silver futures for September delivery SIU6, -0.57% trading was muted, with the metal slipping 2 cents, or 0.3%, to trade at $20.41 an ounce.
Ross Norman, chief executive officer at London-based commodities broker Sharps Pixley. said precious metals should benefit from concerns about the European banking sector, and fresh round of stimulus measures by the BOE and Bank of Japan to boost flagging economies, raise concerns about global economic health.
Norman said “with the macroeconomic environment darkening, there are signs that savers remain concerned about the vulnerability or even fragility of the banking sector and there are only so many options one can go to.”
