* Gold one and three-month forward rates suggest increased
* China June consumer inflation up more than expected
* Gold-backed ETF outflow continues
* Investors await U.S. June FOMC minutes Wednesday
(New updates throughout, adds comment, adds second byline, NEW
YORK to dateline)
By Frank Tang and Clara Denina
NEW YORK/LONDON, July 9 Gold hit a one-week high
on Tuesday, gaining 1 percent on strong physical demand, and as
Chinese inflation data boosted the metal's appeal as a hedge.
The metal's second consecutive daily gain was sparked by
data showing China's annual consumer inflation accelerated more
than expected in June.
Signs of tightness in gold forward market also boosted
News that the 1-month and 3-month Gold Forward Offered Rates
(GOFO), rates at which bullion banks are prepared to lend gold
on a swap against U.S. dollars, fell for the first time in years
underpinned gold prices.
"Clearly there is some dislocation in the physical market
and maybe because demand has been surprisingly strong that has
caused some temporary shortages," said Societe Generale analyst
Robin Bhar, adding that there has been a lot of gold borrowing
in the last 24 hours .
Spot gold touched its highest since July 2 at
$1,260.01 an ounce earlier. It traded at $1,245.90 an ounce, up
0.9 percent by 3:34 PM EDT (1934 GMT)
U.S. Comex gold futures for August delivery settled
up $11 to $1,245.90 an ounce, as trading volume was 15 percent
below its 30-day average, preliminary Reuters data showed.
Liquidation in bullion-backed exchange traded funds
continued, suggesting gold prices could come under renewed
pressure, analysts said.
Holdings in the SPDR Gold Trust, the world's largest
gold ETF, fell to the lowest since February 2009, down 1.6
percent to 946.96 tonnes.
Investors are now focusing on the Federal Open Market
Committee (FOMC) minutes - records from the Fed's June meeting -
due for release on Wednesday.
Traders also attributed some of Tuesday's gains to technical
buying once prices crossed $1,245, the level at which gold stood
before nonfarm payroll data came out last Friday.
The technical buying also forced investors to cover short
positions, which they had increased in the expectation of
Bullion has fallen nearly 10 percent since Federal Reserve
Chairman Ben Bernanke said last month the economy was recovering
strongly enough for the U.S. central bank's $85 billion monthly
bond-buying stimulus to be reduced as soon as later this year.
It came under additional pressure late last week as a strong
U.S. jobs report showed the employment market remains on track
for a recovery.
Among other precious metals, silver climbed 0.9
percent to $19.21 an ounce. Platinum rose 0.4 percent to
$1,363 an ounce and palladium gained 0.3 percent to
$697.22 an ounce.
3:34 PM EDT LAST/ NET PCT LOW HIGH CURRENT
SETTLE CHNG CHNG VOL
US Gold AUG 1245.90 11.00 0.9 1232.00 1258.70 153,693
US Silver SEP 19.138 0.100 0.5 18.930 19.485 31,370
US Plat OCT 1368.60 6.60 0.5 1354.00 1381.10 7,247
US Pall SEP 697.35 1.95 0.3 692.00 705.00 2,848
Gold 1247.39 11.50 0.9 1234.18 1260.01
Silver 19.210 0.170 0.9 19.020 19.500
Platinum 1363.00 5.00 0.4 1355.00 1377.50
Palladium 697.22 2.22 0.3 694.75 703.00
TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG
US Gold 179,148 206,364 183,141 24.84 -1.69
US Silver 34,423 67,384 56,313 36.42 -0.92
US Platinum 7,416 16,723 13,034 28.76 0.85
US Palladium 2,889 5,249 5,539
(Additional reporting by A. Ananthalakshmi in Singapore;
editing by James Jukwey and David Evans; Editing by Diane Craft)