Gold inches up following BOE rate cut, ahead of U.S. jobs report

Commodities

Gold ticked up on Thursday, remaining near 28-month highs, as investors looked past a highly telegraphed interest rate cut from the Bank of England placing a greater focus on the U.S. monthly job report set to be released at week's end.

On the Comex division of the New York Mercantile Exchange, Gold for December delivery traded between $1,355.25 and $1,371.35 an ounce before settling at $1,367.05, up 2.35 or 0.17% on the session. With the slight declines, Gold closed higher for the seventh time over the last eight sessions. Since opening the year near $1,075 an ounce, Gold has soared approximately 29% over the last six months and is on pace for one of its strongest years in a decade.

Gold likely gained support at $1,337.50, the low from July 20 and was met with resistance at $1,391.40, the high from March 14, 2014.

On Thursday morning, the Bank of England as expected lowered its benchmark interest rate by 25 basis points to a record-low of 0.25%, representing its first interest rate cut in seven years. Notably, the BOE increased its asset purchasing by GBP 60 billion, outlined a plan to begin buying GBP 10 billion of corporate bonds per month and announced an initiative for providing as much as GBP 100 billion to banks under a comprehensive term funding scheme. "We have launched a timely, coherent and comprehensive package," BOE governor Mark Carney said.

At the same time, the Bank of England's Monetary Policy Committee (MPC) increased its near-term inflation outlook on Thursday, due primarily to the recent depreciation of the Pound Sterling. By year's end, the MPC expects inflation to reach 0.8%, up from previous estimates of 0.4%. The MPC also anticipates that inflation will increase to 1.9% by the end of 2017 and overshoot its 2% target in December, 2018. Carney emphasized that additional rate cuts and further easing measures could be forthcoming if the figures in Thursday's inflation forecast wind up being accurate. GBP/USD plummeted more than 1.5% in response to the rate decision, falling to an intraday low of 1.3112. The Pound has plunged nearly 12% against the Dollar since U.K. voters decided to leave the European Union in a historic referendum on June 24.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, gained more than 0.20% to an intraday high 95.87. The index is still sharply below four-month highs of 97.62 from early last week. Dollar-denominated commodities such as Gold become more expensive for foreign purchasers when the dollar appreciates.

Silver for September delivery fell 0.039 or 0.19% to 20.432 an ounce.

Copper for September delivery lost 0.025 or 1.11% to 2.175 a pound.

Sourse by Investing.com