Gold up on China stimulus hopes

Gold prices rose further by 100 baht per baht weight at its opening on Saturday.

The Gold Traders Association announced the buying price at 18,550 baht and the selling price at 18,650 baht per baht-weight for gold bars.

The buying price for gold ornaments was 18,282.96 while their selling price was 19,050 baht per baht-weight.

The prices were adjusted three times on Friday for a total gain of 150 baht from Thursday's close.  

In world markets, gold advanced the most in more than two weeks amid speculation that China, the world’s biggest consumer, will take more measures to bolster the economy, boosting demand for the precious metal as a store of value, according to Bloomberg.

The People’s Bank of China plans to temporarily waive a requirement for lenders to set aside reserves for some deposits, people with knowledge of the matter said. Gold surged 70% from December 2008 to June 2011 as central banks increased money supply on an unprecedented scale.

Gold has rebounded almost 6% from a four-year low reached in November as China lowered interest rates last month to spur economic growth and Japan expanded its unprecedented stimulus programme. The moves rekindled concern that global inflation could rise even as US consumer costs stay below the Federal Reserve’s goal.

“Speculation that China will do more to support the economy is creating demand for gold,” George Gero, a precious-metal strategist at RBC Capital Markets in New York, said in a telephone interview. “At some point with all this money in the system, we could see some concern about inflation.”

Gold futures for February delivery climbed 1.9% to settle at $1,195.30 an ounce at 1.40pm on the Comex in New York, the biggest gain for a most-active contract since Dec 9. Prices declined 1.9% in the previous three sessions. Aggregate trading was 55% below the 100-day average for this time, according to data compiled by Bloomberg.

Bullion has declined 0.6% this year as prospects for higher US borrowing costs, accelerating economic growth and a plunge in crude-oil prices crimped investor demand for the metal. The metal slumped 28% last year as equities surged amid muted inflation.