Gold rose more than 1 percent on Monday and held near its highest in more than a week, as a rebound in prices from multi-year lows failed to damp investor appetite for the precious metal, causing a shortage in physical supply.

Recent bleak U.S. growth data that raised hopes the Federal Reserve would keep its current pace of bond buying at $85 billion a month also supported gold, widely seen as a hedge against inflation.

U.S. gold futures, which often provide trading cues to cash gold, hit a high of $1,472.20 an ounce. By 0553 GMT, prices stood at $1,468.90 an ounce, up $15.30. Spot gold rose $6.70 to $1,469.20 an ounce.

Both cash gold and futures sank to around $1,321 on April 16, their lowest in more than two years, after a drop below $1,500 sparked a sell-off that prompted investors to slash holdings of exchange-traded funds. They touched an 11-day peak above $1,484 on Friday.

“I don’t think gold is out of the woods yet, but there’s room for upward correction. One of the reasons why gold has dropped so much was the strong signs of U.S. economic recovery. Now, we don’t see much of it,” said Joyce Liu, an investment analyst at Phillip Futures in Singapore.

—-

Click below for the full article.

http://www.reuters.com/article/2013/04/29/markets-precious-idUSL3N0DG04220130429