Gold gains as demand rises

LONDON: Gold rose on Tuesday after a wave of risk aversion due to growth worries in China and rising tensions in the Middle East triggered demand for the metal.


Spot gold was up 0.3 per cent at $1,077.75 an ounce by 1514 GMT. On Monday, the metal jumped by as much as 2.2pc to a four-week high of $1,083.30 after data showed Chinese factory activity contracted for a 10th straight month in December.

“More weakness in China … would be more positive for gold but investors would need to see more evidence of systemic issues there, which is still unlikely,” Julius Baer analyst Carsten Menke said.

“That could be the only longer lasting upside for gold in an otherwise bearish outlook due to sound growth in the US and lack of inflation risks.”

Safe-haven rallies tend to be short-lived and gold could see the focus shift back to US monetary policy soon.

Silver rose 0.6pc to $13.93 an ounce, having ended 2015 down 11.7pc. Among industrial metals, platinum was up 0.4pc to $890 an ounce and palladium gained 0.3pc to $539.53, after falling more than 4pc on Monday.