QMX Gold Corp. (fka QMXGF)

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Gold 1395.60 Gains in New York
Trading on China's Rate Action, Europe Debt Concern
By Nicholas Larkin and Glenys Sim - Dec 13, 2010 5:26 AM PT

Gold gained in New York as investors sought a protection of wealth from Europe’s debt woes and as China’s decision to hold off raising interest rates may boost demand.

China, which last week raised reserve-requirement ratios for banks by half a percentage point, didn’t increase interest rates this weekend even after consumer prices climbed at the fastest pace in more than two years in November. European government leaders are divided over how to stem the region’s debt crisis that helped push gold to a record this month.

“The ongoing uncertainty over euro zone debt and increasingly inflationary pressures in China create a positive environment to future bullion gains,” James Moore, an analyst at TheBullionDesk.com in London, said in a report.

Gold futures for February delivery added $7, or 0.5 percent, to $1,391.90 an ounce at 7:57 a.m. on the Comex in New York. Prices reached a record $1,432.50 on Dec. 7. The metal for immediate delivery in London was 0.4 percent higher at $1,391.15.

Bullion rose to $1,388.25 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,375.25 at the afternoon fixing on Dec. 10.

The People’s Bank of China on Dec. 10 ordered banks to park more money with the central bank for the third time in five weeks. Copper advanced to a record today and other commodities gained on speculation demand from the Asian country will increase. China is the biggest gold jewelry buyer after India and some investors buy gold as a hedge against rising consumer prices and low interest rates.

European Leaders Meet

“Gold is rising along with other commodities as investors buy raw materials in anticipation of even higher prices,” said Liu Yangyi, a trader at Beijing Zhong Jing He Investment. “The potential for further tightening in China remains a risk.”

European Union leaders attend a summit on Dec. 16 and 17, with Italy, Belgium and Luxembourg favoring euro-area bonds, while Germany and France oppose the idea. The euro’s survival is “non-negotiable,” requiring budget vigilance and closer economic cooperation to overcome “structural weaknesses” within the euro region, German Chancellor Angela Merkel and French President Nicolas Sarkozy said Dec. 10.

Gold assets in exchange-traded products fell 2.35 metric tons to 2,093.41 tons on Dec. 10, according to data compiled by Bloomberg from 10 providers. Holdings reached a record 2,104.65 tons on Oct. 14. Silver holdings gained 18.95 tons to 15,039.14 tons, the highest amount since at least February, data from four providers show.

Silver for March delivery in New York rose 2.9 percent to $29.43 an ounce. It rose to $30.75 on Dec. 7, the highest level since March 1980, and is up 75 percent this year. Prices reached an all-time high of $50.35 in New York in 1980, a year after the Hunt brothers tried to corner the market.

Palladium for March delivery gained 2.5 percent to $751.20 an ounce. It climbed to $780 on Dec. 3, the highest price since April 2001. Platinum for January delivery was 1.1 percent higher at $1,693.30 an ounce.

http://www.bloomberg.com/news/2010-12-13/gold-may-drop-as-concern-china-to-extend-tightening-measures-cuts-demand.html