Gold recovers from 30-month low as slump may increase demand

LONDON: Gold today recovered from 30-month low on speculation demand may be spurred by the price slump that followed the Federal Reserve's indications on cutting stimulus.

The gold rose 0.3 per cent to $1,285.67 an ounce. Prices reached $1,269.46 on June 21, the lowest since September 2010. Silver also rose 0.6 per cent to $19.79 an ounce, after touching $19.39, the lowest since September 2010.

The metal fell 6.8 per cent last week after Fed Chairman Ben Bernanke said the US central bank, which buys $ 85 billion of treasury and mortgage debt a month, may slow its asset purchase program if the US economy continues to improve.

Some analysts said prices may rebound as Russia and Kazakhstan were among nations that expanded bullion reserves in May.

Bullion slid 23 per cent this year as some investors lose faith in it as a store of value and as speculation grew that the Fed will taper debt-buying that helped the metal cap a 12-year bull run last year.

Morgan Stanley lowered its forecasts for prices and said waning investor interest has turned more serious on the prospect of less stimulus that's pushed up bond yields and strengthened the dollar.