Gold continues rebound from three-year low

SINGAPORE Tue Jul 2, 2013 12:04pm IST

A customer looks at a few 24K gold keys left on an shelf inside a jewellery store at Hong Kong's Mongkok district April 23, 2013. REUTERS/Bobby Yip/Files

A customer looks at a few 24K gold keys left on an shelf inside a jewellery store at Hong Kong's Mongkok district April 23, 2013.

Credit: Reuters/Bobby Yip/Files

Related Topics

SINGAPORE (Reuters) - Gold inched up on Tuesday, stretching its gains into a third straight session as buyers in China continued to snap up deals after bullion's plunge to a three-year low last week.

Prices were also helped by short covering that kicked in after gold logged its biggest ever three-month loss in the second quarter ended June on indications of an early wind down of the U.S. Federal Reserve's stimulus measures.

"We can see some stock loading in the market and physical buying in Shanghai," said a trader in Hong Kong.

"However, fundamentals are still bearish and we will test the upside at $1,270."

Spot gold rose 0.35 percent to $1,257.24 an ounce by 0624 GMT, while U.S. gold rose about $2 to $1,257.4.

Shanghai futures rose for a second straight day after nine consecutive declines. They were trading at over $30 premiums to spot prices.

Bullion, typically seen as a hedge against inflation, has taken a beating since Fed Chairman Ben Bernanke said last month the economy was recovering strongly enough for the central bank to begin tapering its $85 billion monthly bond purchases in the next few months.

Gold plunged 22 percent in the second quarter and is headed for a 25 percent drop this year, its biggest decline since 1981. It fell to $1,180.71 last week, its lowest since August 2010.

Spot gold is expected to end its current rebound at or below $1,273 per ounce, according to Reuters technical analyst Wang Tao.

Physical demand has not come to the rescue of gold as it did in April when prices fell the most in 30 years.

In Hong Kong, gold bar premiums over London prices remained at the same levels as last week, indicating that demand has not picked up strongly, dealers said.

Mixed U.S. economic data on Monday added to uncertainty over the exact timing of the Fed's tapering.

U.S. manufacturing expanded last month, rebounding from an unexpected contraction in May, and construction spending neared a four-year high in May. However, hiring in the manufacturing sector was the weakest in nearly four years.

A more important jobs report, the U.S. nonfarm payrolls, is expected to be released on Friday.

SPDR Gold Trust, the world's largest gold exchange-traded fund, said its holdings fell 0.12 percent to 968.30 tonnes on Monday - its lowest since February 2009.

(Editing by Himani Sarkar)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Consumer Confidence Index

REUTERS SHOWCASE

Food Scandal

Food Scandal

Starbucks, Burger King dragged in as China food scandal spreads.  Full Article 

Bigger iPhones

Bigger iPhones

Apple asks suppliers to produce up to 80 mln large-screen iPhones - WSJ.  Full Article 

Gaza Conflict

Gaza Conflict

Israel keeps up Gaza assaults, Kerry presses for truce.  Full Article 

Ukraine Crash

Ukraine Crash

Bodies, black boxes handed over from Ukraine crash site.  Full Article 

Bali Trade Deal

Bali Trade Deal

India keeps world guessing in countdown to landmark trade pact deadline.  Full Article 

Bangalore Sex Abuse

Bangalore Sex Abuse

Modi's BJP puts political twist on local sex abuse case   Full Article 

Yahoo to buy Flurry

Yahoo to buy Flurry

Yahoo to buy analytics startup Flurry to bolster mobile ad business.  Full Article 

Wholesale Biz

Wholesale Biz

Wal-Mart adds $102.9 million in Indian wholesale business in June.  Full Article 

Monsoon Effect

Monsoon Effect

Thailand to reclaim top rice exporter spot after poor Indian rains.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage