Gold gains to one-week high on China inflation,physical demand

London, Jul 9. Gold today climbed to a one-week high as a bigger-than-estimated increase in China’s inflation and lower prices spurred demand for the metal. Gold rose 1.6 per cent to USD 1,256.34 an ounce. Prices reached USD 1,260.70, the highest since July 2. Silver also rose 1.6 per cent to USD 19.40 an ounce. It’s the worst performer in the Standard and Poor’s GSCI gauge of 24 commodities this year. China’s consumer price index rose 2.7 per cent from a year earlier, the National Bureau of Statistics said today, compared with analysts expectations of 2.5 per cent. Bullion rose 1.1 per cent yesterday as the dollar retreated from a three-year high against six currencies. Gold slid 25 per cent this year, wiping USD 61.2 billion from the value of gold exchange-traded product holdings, after some investors lost faith in the metal as a store of value as the Federal Reserve said it may slow bond buying this year. Prices also slumped because unprecedented stimulus failed to spur US inflation. Expectations for gains in US consumer prices, as measured by the break-even rate for 10-year Treasury Inflation Protected Securities, fell 15 per cent this year.