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Interest Rate Cut by China’s Central Bank Shocks Markets

November 21, 2014 at 21:10 by Vladimir Vyun

The People’s Bank of China made a surprise move today, cutting its interest rates in an effort to boost economic growth. The announcement had tremendous impact on various markets, leading to a rally of gold and crude oil. Even prices for soybeans, which were falling previously, surged due to the news.

The PBoC announced that it lowers the one-year deposit rate by 0.25 percentage point to 2.75 percent and reduces the one-year lending rate by 0.4 percentage point to 5.6 percent. The changes will take effect tomorrow.

China is the world’s second biggest economy, meaning that its performance has huge influence on global markets. The Asian nation is the world’s top consumer of gold and soybeans and the second largest oil-consuming country.

December futures for delivery of gold advanced 0.82 percent to $1,200.70 per troy ounce as of 21:01 GMT on COMEX today. January contract for WTI crude oil jumped 1.00 percent to $76.61 per barrel on NYMEX. Futures for soybeans rallied as much as 1.81 percent to $10.3900 per bushel on CBoT.

If you have any questions and comments on the commodities today, use the form below to reply.

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