Investing.com - Gold prices rallied to a five-week high on Tuesday, following reports that the European Central Bank is considering corporate bond purchases and could decide on the matter as soon as December.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery hit a daily high of $1,255.60 a troy ounce, the most since September 10.
Prices last traded at $1,253.50 during European morning hours, up $8.80, or 0.71%.
A day earlier, gold prices tacked on $5.70, or 0.46%, to settle at $1,244.70.
Futures were likely to find support at $1,222.00, the low from October 15, and resistance at $1,257.60, the high from September 10.
Reuters reported that the European Central Bank is examining plans to purchase bonds issued by companies, or corporate debt, to help shore up growth and boost slowing inflation in the euro area.
The report said the ECB could activate the new stimulus plan as soon as December and start bond purchases by early next year.
The central bank began purchasing covered bonds on Monday in a bid to increase liquidity in the region.
Expectations of monetary stimulus tend to benefit gold, as the metal is seen as a safe store of value and inflation hedge.
Meanwhile, investors continued to speculate over the timing of a rate hike in the U.S. after a report showed that U.S. existing home sales rose to a 12-month high in September.
The National Association of Realtors said that existing home sales increased 2.4% to a seasonally adjusted 5.17 million units last month from 5.05 million in August.
Analysts had expected existing home sales to rise 1% to 5.10 million units in September.
Gold prices remained supported amid speculation weaker than expected global economic growth and its effect on the U.S. economy may lead the Federal Reserve to push back interest-rate increases.
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.
Also on the Comex, silver futures for December delivery picked up 25.4 cents, or 1.46%, to trade at $17.60 a troy ounce.
Elsewhere in metals trading, copper for December delivery inched up 3.4 cents, or 1.12%, to trade at $3.022 a pound.
Official data released earlier showed that China’s economy expanded at an annual rate of 7.3% in the third quarter, down from growth of 7.5% in the preceding quarter.
While the figure exceeded market expectations of 7.2%, it was also the slowest expansion since the first quarter of 2009.
A separate report showed that industrial production rose by an annualized rate of 8.0% in September, compared to forecasts for a 7.5% increase, after a 6.9% gain in the previous month.
Fixed asset investment and retail sales figures were weaker than expected, indicating that the recovery remains fragile and may require further monetary stimulus.
The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption.