Gold rises as bearish bets drop amid sign of bottoming

LONDON: Gold today rose for the second time in three days amid signs that investors are closing bearish bets after prices rebounded from a 34-month low.

Gold rose by 0.1 per cent to USD 1,367.84 an ounce and silver by 0.7 per cent to USD 23.04 an ounce.

Gold has climbed 16 per cent from a low in June as consumer demand rose in China and India spurring analysts, including JPMorgan Chase and Bank of America, to say prices are bottoming.

Hedge funds cut bearish bets on gold in New York by 17 per cent in the most-recent week, US Commodity Futures Trading Commission data show.

Prices fell 0.3 per cent yesterday after US Federal Reserve minutes showed policymakers were comfortable with a plan to start reducing bond buying later this year if the economy improves, with a few saying tapering may be needed soon.

The World Gold Council estimates sales of jewellery, coins and bars will reach 1,000 tonnes this year in both India and China, the largest buyers. China's demand totalled 776.1 tonnes last year, while India consumed 864.2 tonnes.

Holdings in the SPDR Gold Trust, the biggest bullion- backed exchange-traded product, fell to 913.52 tonnes yesterday, taking this year's contraction to 32 per cent.

In China, volumes for the benchmark spot gold contract declined to 9,573 kg yesterday from a two-week high of 10,926 kg on Aug. 20, according to Shanghai Gold Exchange.