Gold prices rose nearly 2 percent on Tuesday, as risk-averse investors bought the precious metal on concerns about the Chinese economic outlook and renewed worries about the Greek debt crisis. Spot gold was bid at $1,511.05 an ounce at 1:23 p.m. EDT (1723 GMT), against $1,495.54 late in New York on Monday. US gold futures for August delivery were up $29.50 an ounce to $1,512.10, a 1.99 percent increase.
Media reports about a possible rate rise in China and a Moody's report saying the scale of problem loans at local governments there may be much bigger than previously thought dented risk appetite, which had returned to the markets last week after Greece approved austerity measures. "Certainly, the Chinese stories this morning have helped (gold)," said Credit Suisse analyst Tom Kendall.
"We have seen a bit of buying coming back in from some of the institutional names that have been absent for a while, and positioning in gold is a lot less from shorter-term players than it has been," he added. Treasury futures rebounded on Tuesday, paring some of the heavy losses seen last week, as a warning over the exposure of Chinese banks and continuing uncertainty in the eurozone boosted safe-haven assets, including gold.
"If you're talking about the gold market, they beat about $60 out of it last week. Why can't you have a reasonable rebound today, even with a stronger US dollar. We shouldn't be surprised by this," said Dennis Gartman, publisher of The Gartman Letter. Some analysts look for gold to next target $1,550 per ounce as technical and fundamental factors align to send gold higher.
Meanwhile, concern over mounting debt levels in eurozone economies like Greece, Ireland and Portugal were a key factor driving gold to record highs above $1,575 an ounce in May. Asian gold demand firmed after prices slid below $1,500 an ounce, with buying picking up in Thailand after Sunday's election and premiums rising in Singapore. Indian and Chinese buyers - the world's top gold consumers - were also seen in the market, though seasonal factors muted buying. Among other precious metals, silver was bid higher at $35.36 an ounce against $34.08, spot platinum rallied to $1,734.85 an ounce versus $1,718.55, and spot palladium jumped to $771.15 an ounce against $757.45.
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