Gold rose on Monday, benefiting from a shift in funds out of equities as concerns over global economic growth lifted bullion's safe-haven appeal and stretched its gains following its best week in a month. The recent fall in gold prices also kept physical demand for the metal high in Asia with sellers struggling to keep pace with orders. Gold prices remain around $150 cheaper compared to levels just before a sell-off in mid-April.
Spot gold was up 0.6 percent at $1,393.56 an ounce by 0752 GMT, after rising by 2 percent last week. Gold is still down nearly 17 percent this year, however, after last month's rout pushed prices down to a two-year low of $1,321.35. "Since prices have been going down, we have seen almost 300 percent increase in sales," said Gregor Gregersen of Silver Bullion Pte Ltd, a gold and silver dealer in Singapore.
Gregersen said dealers were facing difficulty meeting demand as supplies were tight. "Delivery times have become longer and longer to a point where we are not selling certain products anymore until we can get some supply." Premiums for gold bars hit a record high in Asia amid the tight supplies last week as lower spot prices attracted buyers, mainly in China, the world's second biggest consumer of the precious metal.
Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.24 percent to 1016.16 tonnes on Friday, their lowest in more than four years. US gold rose 0.43 percent to $1,392.50, while silver, platinum and palladium tracked gold higher.
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