Gold and silver rally in trouble

February 9, 2015 08:21 AM

Gold and silver rose for the first time in three days on concern Greek debt demands are fueling political turmoil in Europe and Chinese buyers are adding to gold purchases before the Lunar New Year holiday.

Prime Minister Alexis Tsipras reaffirmed his government’s rejection of Greece’s international bailout program before Wednesday’s emergency meeting of the euro area’s finance ministers to discuss the country’s financing needs. In Shanghai last week, trading of gold for immediate delivery was the highest in a month.

“Physical demand is strengthening as we approach the Chinese New Year,” Bernard Sin, a trader at refiner MKS (Switzerland) SA, said by phone Monday. “We also saw some bargain hunting after Friday’s price drop, particularly in ETFs.”

Gold slid 2.2% on Friday as the U.S. economy added more jobs in January than forecast, boosting speculation that the Federal Reserve will move toward the first interest-rate increase since 2006. Holdings in bullion-backed funds rose to the highest since October, according to data compiled by Bloomberg as of Feb. 6.

Bullion for April delivery rose 0.5% to $1,240.70 an ounce as of 7:11 a.m. on the Comex in New York. Gold for immediate delivery added 0.6% to $1,240.90, according to Bloomberg generic pricing.

India’s Trade Ministry has asked the nation’s Finance Ministry to reduce the gold import tax to 2% from 10%, according to a report in the Wall Street Journal that cited an unidentified official.

Silver for March delivery advanced 1.6% to $16.955 an ounce. Platinum and palladium were little changed.

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