Investing.com - Gold prices held above the $1,200-level on Monday, after China's central bank cut banks' reserve requirement ratios in a surprise decision over the weekend and as uncertainty over Greece’s bailout negotiations with its creditors remained in focus.
On the Comex division of the New York Mercantile Exchange, gold futures for June delivery tacked on $2.50, or 0.21%, to trade at $1,205.60 a troy ounce during European morning hours.
Futures held in a tight range between $1,202.50 and $1,208.70. Prices were likely to find support at $1,183.50, the low from April 14, and resistance at $1,215.90, the high from April 7.
The People's Bank of China lowered the amount of deposits it requires banks to hold as reserves to 18.5% from 19.5% effective April 20, it announced on Sunday.
The move came after official data last week showed that China’s economy grew 7.0% in the first quarter, the slowest pace of growth since the global financial crisis in 2008.
Data on industrial production, retail sales and fixed asset investment also fell short of forecasts, indicating that China needs to act to prevent a further slowdown in the economy.
Gold can benefit from such an environment of easy money because of expectations that ample liquidity would put a damper on the value of paper currencies.
Meanwhile, concerns over the lack of an agreement on economic reforms for bailout funds between Greece and its creditors remained in focus, fuelling fears that the debt-strapped nation could be forced out of the euro zone.
The dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.15% to trade at 97.76 early on Monday.
The index lost 1.9% last week amid speculation the Federal Reserve could delay hiking interest rates until late 2015, instead of tightening midyear, after a recent run of soft economic data dampened optimism on the recovery.
A delay in raising interest rates would be seen as bullish for gold, as it decreases the relative cost of holding on to the metal, which doesn't offer investors any similar guaranteed payout.
Elsewhere on the Comex, silver futures for May delivery eased up 0.4 cents, or 0.02%, to trade at $16.23 a troy ounce, while copper for May delivery dipped 0.2 cents, or 0.05%, to trade at $2.773 a pound.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption.