HomeNewsGold up on euro zone debt fears, premiums at 2-year high

Gold up on euro zone debt fears, premiums at 2-year high

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Gold inched up on Tuesday on persistent worries about indebted euro zone countries, while purchases from investors and jewellers pushed up premiums for gold bars to their highest in two years.

Bullion’s drop to its lowest in more than a month last week also helped lift premiums for gold bars, with demand picking up ahead of the Lunar New Year celebration in February.

Gold bars were offered at a premium of $3 to the spot London prices in Hong Kong, matching a similar level seen in late 2008.

Spot gold rose $1,35 an ounce to $1 375,80 an ounce by 0640 GMT. Gold was well below a historical high of around $1 430 struck in December.

“There’s a huge demand from China. Refineries just opened and there’s not much stock around, so it’s a bit tight,” said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.

Investors will also closely watch the developments in Portugal, which is widely seen as the country next in line in the euro zone to need a bailout after Greece and Ireland, said Leung.

Gold will rebound into a range of $1 388-$1 392 per ounce as an upward wave “c” is advancing, according to Wang Tao, a Reuters market analyst for commodities and energy technicals.

The euro on Tuesday hovered above a four-month trough hit the previous day, after Japan said it may buy about a fifth of the bonds a European rescue fund plans to sell later this month to finance its bailout scheme for Ireland.

The focus this week is on whether Lisbon will be able to raise funds in the debt market today or be forced to turn to the EU and IMF for financial aid.

US gold futures for February added $2,1 an ounce to $1 376,2 an ounce. The physical sector in Singapore was steady after seeing heavy buying from jewellers in Thailand on Monday, which could be related to inflation fears there.

Thailand’s central bank said on Tuesday it expected rising inflationary pressure this year if the global and domestic economies expanded as expected, reinforcing market expectations of further monetary tightening.

“Trading is mixed this morning, with moderate trading volume,” said a dealer in Singapore. “The market is currently short of physical supply. We have no available stocks to offer except for those who have booked in advance.

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