Investing.com -- Gold futures fell mildly as the People's Bank of China unexpectedly introduced fresh stimulus measures on Friday, marking the sixth time the central bank has lowered interest rates since November.
On the Comex division of the New York Mercantile Exchange, gold for December delivery traded in a broad range between $1,158.90 and $1,179.40 an ounce, before settling at $1,163.00, down 3.10 or 0.26% on the session. Gold closed lower for the third straight day and the sixth time in seven sessions. After closing above $1,180 an ounce last week, gold fell by roughly 1.25% over the last five trading days. More broadly, the precious metal is still up more than 5% from its level in late-July when it dipped below $1,090 an ounce to touch down to a six-year low.
Gold likely gained support at 1,138.70, the low from Oct. 8 and was met with resistance at $1,189.00, the high from Oct. 14.
On Friday, the PBOC slashed its one-year lending rate by a quarter of a percentage point, in its latest attempt to bolster its flagging economy by easing monetary policy.
The moves come several days after China's National Bureau of Statistics reported that Chinese GDP grew by 6.9% in the third quarter, marking the slowest three-month period of growth since the height of the Financial Crisis. The soft reading exacerbates concerns that the world's second-largest economy could end the year with its slowest pace of growth in more than a decade.
China is the world's largest producer of gold and the second-largest consumer of the precious metal behind India.
In addition, the PBOC also lowered its Reserve Requirement Ratio (RRR) or the amount of cash commercial banks must set aside in reserves, by 0.5%. In a statement released on Friday, the PBOC said the RRC cut was needed in order to "maintain reasonably ample liquidity in the banking system." Two months after the PBOC rattled global markets with a shocking devaluation of the yuan, capital outflows in China have increased substantially as concerned investors have moved funds offshore to safer areas. The PBOC also removed a ceiling on rates banks are required to pay depositors in an effort to keep Chinese customers from moving their investments abroad.
The Chinese central bank announced the measures one day after European Central Bank president Mario Draghi sent strong hints that the bank could lower interest rates and extend the scope of its asset-purchasing program when the ECB Governing Council meets next in December. As a result, the dollar surged against the euro in Thursday's session posting its strongest one-day move this year. The dollar continued its rally on Friday as investors digested Draghi's comments, placing downward pressure on gold.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, gained more than 0.7% to an intraday high of 97.19. At one point on Friday, the index reached its highest level since mid-August. Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Silver for December delivery gained 0.003 or 0.02% to close at 15.845 an ounce.
Copper for December delivery plunged 0.036 or 1.50% to 2.348 a pound.