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Gold Forecasts For China Drive Prices Higher

April 2, 2014

Chicago (Apr 2)  Gold rose, ending the longest slump in 19 weeks, on speculation that demand for bars and jewelry will increase in China after futures touched a seven-week low.

ANZ Banking Group said Wednesday its gauge of demand increased late last month in China, the world's biggest buyer. Iraq's central bank plans to process 11 metric tons for public sale, and will import bars to sell to goldsmiths. The outlook for reduced U.S. monetary stimulus and higher borrowing costs helped push futures Tuesday to the lowest since Feb. 11.

"People are betting on increased physical buying and bargain hunting at these levels," said Phil Streible, a senior commodity broker at R.J. O'Brien & Associates in Chicago. "This may be temporary, as prices could head lower because of expectations of higher interest rates."

Gold futures for June delivery rose 0.8% to settle at $1,290.80 an ounce at 1:45 p.m. on the Comex in New York. The price has climbed 7.4% this year. China overtook India as the largest buyer last year

The metal dropped in the previous five sessions, the longest slump since Nov. 13. On Tuesday, gold fell as low as $1,277.40 after dropping 2.9% in March amid signs of an improving U.S. economy.

Last year, gold tumbled 28%, the most since 1981, as U.S.equities rallied to a record and inflation remained muted. Federal Reserve Chair Janet Yellen said on March 19 that the central bank may end asset purchases this fall and increase borrowing costs six months after that.

 Source: newsInvestors

 

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