Gold prices rose more than 1 percent today as concerns over the outlook for the Chinese economy and lingering worries about the Greek debt crisis renewed risk aversion, pushing investors to turn to the safe haven asset.
Speculation is increasing on a possible rate rise in China and a Moody’s report today saying the scale of problem loans at local governments there may be much bigger than previously thought dampened 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.”
Spot gold rose to the New York session high of $1,511.73 by 14:11GMT, from the European session low of $1,492.98 U.S. gold futures for August delivery rose $26.30 an ounce to $1,508.90.