Gold rises on back of new worries over Greece
Published 15/06/2011 | 05:00
THE price of gold rose again yesterday after a flurry of inflation figures showed pressure on prices across the globe.
Spot gold was at $1,520.62 (€1,049) an ounce, up 0.4pc from Monday, when it suffered its biggest one-day loss in a month, touching a three-week low of $1,511.
These are record price levels for the precious metal, prompting some investors to view its price as a bubble.
Renewed concern about Greece and its ability to fund itself continued to generate interest in the yellow metal.
And the high price of gold was supported when new figures in the US showed wholesale prices rose again in May and consumer spending staged its first drop in 11 months, fanning existing concern about the world's largest economy.
Chinese data released earlier yesterday showed inflation in the world's second largest economy is running at its fastest pace in almost three years, giving investors an additional incentive to buy gold.
Gold is seen as a hedge against rising price pressures.
Traders said there was a tidal wave of demand for the metal coming from India and China.
Talk of a second bailout for Greece coming closer to a conclusion as the European Commission pushes for a voluntary debt swap also helped shore up sentiment.
Analyst at VTB Capital, Andrey Kryuchenkov, told Reuters: "A weaker dollar has helped the rebound today, albeit amid low volumes. We see uncertainty surrounding the next aid tranche to Greece as gold supportive.
"Uncertainty will underpin the market towards the end of the month when Athens is scheduled to get its next loan under conditions that are currently being worked out."
Greece became the lowest-rated country in the world in the rankings of credit rating agency Standard & Poor's, putting it below Ecuador, Jamaica, Pakistan and Grenada.