China in a bullion shop, pushes gold to four-week high

Gold futures rose to a four-week high as China's physical demand surged to a record and Europe's debt woes spurred demand for a haven. Mainland China bought 102,779 kilograms, an all-time high, from Hong Kong in November, up from 86,299 kilograms in October, according to the Hong Kong government. Fitch Ratings said yesterday that Italy faces a “significant chance” of a credit downgrade. The European Central Bank should boost bond purchases to stem the debt crisis, Fitch said. Gold prices declined 10 percent last month. “The dip in prices could not have come at a better time for the Chinese buyers,” James Cordier, the founder of Optionsellers.com in Tampa, Florida, said in a telephone interview. “Gold is regaining its safe-haven qualities.” Gold futures for February delivery advanced 0.5 percent to $1,639.70 an ounce at 9:58 a.m. on the Comex in New York. Earlier, the metal reached $1,648, the highest for a most-active contract since Dec. 13. China's imports “are extremely bullish,” Bernard Sin, the head of currency and metal trading at bullion refiner MKS Finance SA in Geneva, said in a telephone interview. “We see a lot of investors rebuilding their gold portfolios again. People are still very concerned about Europe.” Gold rose 10 percent in 2011, the 11th straight annual gain, as investors sought to diversify away from equities and some currencies. Silver futures for March delivery fell 1 cent to $29.805 an ounce in New York. --Bloomberg News--