Gold
traded firmly above $1,200 an ounce on Monday, retaining gains from the
previous session on hopes that a surprise rate cut in China would boost
demand for bullion in the top consumer.
Spot gold was steady at $1,202.20 an ounce by 0028 GMT, after gaining 0.6 percent on Friday.
Gold
got a boost from short-covering after China cut interest rates
unexpectedly on Friday, stepping up efforts to support the world's
second-biggest economy as it heads towards its slowest expansion in
nearly a quarter of a century, saddled under a mountain of debt.
China's
leadership and central bank are ready to cut interest rates again and
also loosen lending restrictions, concerned that falling prices could
trigger a surge in debt defaults, business failures and job losses, said
sources involved in policy-making.
Bullion
also got support from comments from European Central Bank President
Mario Draghi that opened the door for more drastic measures to prevent
the euro zone from sliding into deflation.
Gold is seen as a hedge against inflation and slowing economy.
Reuters : Reuters
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