Gold Prices Pop on Increase in Chinese Imports

NEW YORK ( TheStreet) -- Gold prices were climbing Tuesday following a report that gold imports by China from Hong Kong nearly doubled in November from the previous month. Gold dipped 0.16% on Monday.

Gold for February delivery was adding $10 to $1,656.30 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,659.80 and as low as $1,646.80 an ounce, while the spot price was improving $7.80, according to Kitco's gold index.

"The move up today looks like it's just a reaction from some news that imports for China and Hong Kong doubled in November, so obviously China's still buying quite a bit of gold even though they're still producing a lot of it themselves," said Chuck Butler, president of world markets at EverBank.

Silver prices for March delivery was increasing 23 cents to $30.31, while the U.S. dollar index was up 0.29% to $80.40.

The People's Republican of China purchased 90,764 metric tons, which included scrap and coins, according to the Census and Statistics Department of the Hong Kong government, Bloomberg calculated.

The increase in gold holdings signaled to investors that physical demand appeared healthy as the mainland was still in the process of buying into greater positions.

Gold prices took a big hit last week when the Federal Reserve announced mixed sentiment in its latest policy meeting among Fed members as to how much longer the central bank should continue its quantitative easing efforts, but the prospect of physical demand in certain countries and the possibility of more easing efforts during 2013 out of Europe and fiscal stimulus from Japan continue to prop up the yellow metal from a freefall.

Investors likely will be looking ahead to Friday's U.S. import and export prices to gauge the inflation environment. Traders often turn to gold as a hedge against inflation.

Gold was slightly lower on Monday as investors took pause after the precious metal's dismal performance last week to determine the veracity of growing U.S. economic strength. The housing market, manufacturing industry and even the labor market have displayed signs of robust to stable improvement, which likely has given pause to Fed members who have questioned the need for further loose monetary policy.

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