Gold climbs to three-week high as Chinese demand seen sustained

Bullion for immediate delivery gained as much as 0.8% to $1,246.46 an ounce, the highest level since 17 December, and traded at $1,241.93 at 2:36pm in Singapore. Prices strengthened for a third day, erasing an earlier loss, and are 5 percent above a six-month low of $1,182.27 on 31 December.

Gold rallied last week by the most since October on signs of stronger demand in China, which probably overtook India as the largest user last year. The premium for immediate delivery in China was about $21.04 an ounce on Monday from $15.87 on 3 January, when volumes for the benchmark contract on the Shanghai Gold Exchange climbed for a second day. Fifteen analysts surveyed by Bloomberg expect gold to rise this week, two are bearish and four neutral, the highest share of bulls since December 2012.

“Demand in China has been very strong,” said Wallace Ng, a Shanghai-based trader at Gemsha Metals Co.. “Market sentiment is positive and technically the momentum is bullish,” he said.

Bullion’s moving average convergence-divergence indicator, known as the MACD, has been above the so-called signal line from 27 December, a sign to some analysts who study charts that prices may be heading for further gains.

Bullion slumped 28% last year as central banks’ money-printing failed to stoke inflation and the global economy strengthened. Data on Monday may show US services and factory orders climbed, supporting the Federal Reserve’s 18 December decision to reduce its monthly bond buying to $75 billion from $85 billion this month.

The February-delivery contract was little changed at $1,240.30 an ounce after trading between $1,232.20 and $1,245.70 on the Comex in New York.

Silver fell 0.2% to $20.1220 an ounce and platinum lost 0.4% to $1,406.88 an ounce. Palladium advanced as much as 1.1% to $734.73 an ounce, the highest price since 12 December, and was at $731. Bloomberg