Gold today rebounded from a four-week low as a weaker dollar spurred demand for the metal as an alternative investment and South Korea raised bullion reserves.
Gold rose 0.5 per cent to $1,705.32 an ounce, after touching $1,691.40 dollar yesterday, the lowest since November 6. Silver also rose 0.8 per cent to $33.20 an ounce.
The U.S. Dollar Index, a measure against six currencies, reached a six-week low after European finance ministers confirmed a decision to give Greece more time to meet deficit- reduction targets and U.S. President Barack Obama said a higher top tax rate is needed to get an accord that averts the so-called fiscal cliff.
Bank of Japan Deputy Governor Kiyohiko Nishimura said the central bank is ready for action when needed.
The Bank of Korea increased gold reserves 20 per cent last month to diversify investments, boosting holdings for the fourth time since June 2011 and underscoring increased demand by central banks.
The Bank of Korea bought 14 tons last month, raising reserves to 84.4 tons, the central bank said. Brazil, Kazakhstan and Russia added gold to reserves in October, International Monetary Fund said.
Holdings in exchange-traded products expanded to 2,627.035 metric tons yesterday.
Gold also climbed with other commodities including oil and copper as China’s new leader Jinping signaled the government will boost urban development. The country will keep economic policies stable.
Bullion of 99.99 percent purity on the Shanghai Gold Exchange rebounded from a four—week low, trading higher at $1,706.83 an ounce. Volumes for the benchmark cash contract were 4,372 kilograms yesterday from 4,404 kilograms on December 3.