Gold resumes its climb as risk aversion rises again

Gold prices rose back above $1,500 (Dh5,507) an ounce in Europe on Tuesday as risk aversion returned to the inancial markets, stoked by concerns over the outlook for the Chinese economy and plans to roll over Greek debt. Spot gold was bid at $1,502.39 an ounce, against $1,495.54 late in New York on Monday. US gold fut-ures for August delivery rose $20.50 an ounce to $1,503.10. Media reports about a possible rate rise in China and a Moody\'s report saying the scale of problem loans at local governments there may be much bigger than previously thought dented risk appetite, which had returned to the markets last week after Greece approved austerity measures. Providing support Article continues below Certainly the Chinese stories this morning have helped [gold],\" said Credit Suisse analyst Tom Kendall. \"We have seen a bit of buying coming back in from some of the institutional names that have been absent for a while, and positioning in gold is a lot less from shorter-term players than it has been.\" Meanwhile, the premium investors demand to hold Spanish and Italian debt crept up and the cost of insuring peripheral debt against default rose on weak economic data and persistent worries over the impact of a Greek debt rollover. Worries over mounting debt levels in Eurozone economies like Greece, Ireland and Portugal were a key factor driving gold to record highs above $1,575 an ounce in May. Relief after Greece secured a €12 billion (Dh63.78 billion) loan to avert default helped allay some of those concerns last week. But they persist, with Standard & Poor\'s warning on Monday it would treat a rollover of privately held Greek debt now being discussed as a selective default. Below forecast Eurozone PMI data boosted risk-averse sentiment on Tuesday.