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:

Politics of Religion

REUTERS SHOWCASE

Fund Raising

Fund Raising

Flipkart raises $700 million in fresh funding.   Full Article 

Reforms Push

Reforms Push

Modi may order insurance, coal reforms if vote delayed - officials.  Full Article 

Reuters Exclusive

Reuters Exclusive

India looks to sway Americans with nuclear power insurance plan  Full Article 

To Boost Growth

To Boost Growth

Crank up public spending to revive growth - chief economic adviser.   Full Article 

Bold Steps

Bold Steps

SpiceJet rescue plan marks bold bet on Indian aviation recovery.   Full Article 

New Airline

New Airline

Tata, Singapore Air venture Vistara to take off on Jan 9.  Full Article 

Online Sales

Online Sales

Knock knock. Who's there? Amazon's best-selling holiday author.  Full Article 

Chinese Economy

Chinese Economy

China revises up size of 2013 economy, sees no effect on 2014 growth.  Full Article 

Reuters Poll

Reuters Poll

BSE Sensex to hit 32,980 by December 2015  Full Article 

Reuters India Mobile

Reuters India Mobile

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