Gold surges after Chinese inflation report

Gold advanced on Tuesday trading after Chinese inflation data, in spite of being lower than expectations, rose annually to 4.9% in January from 4.6% a year earlier, thereby underpinning demand on gold as a hedge against inflation.

Expectations were in favor of 5.4% rise in CPI, which increase speculations that China may not do further tightening.

Spot gold is traded at $1364.66 an ounce after recording a high of $1366.12 and a low of $1360.75.

The previous session, gold added $5.20 or 0.38% to close at $1361.60, while gold price was setin London at $1356.75 per ounce declining from $1365.00 during the AM fixing.

Inflationary concerns are the main spotlight of central banks all over the world as officials expect inflation levels to elevate over the short term which may give uplift to gold prices.

Later in the day, UK annual CPI is predicted to climb to 4.1% in January from 3.7% in December and RPI is estimated to incline to 5.1% in January from 4.8%.

On the other hand, another support is coming from oil which has been accused of being the main catalyst of the high inflation levels after leaping to the highest level in more than two years in the wake of upheavals in Egypt that started on January 25.

Crude oil rebounded today to $85.30 a barrel compared with the day's opening at $84.77.

Gold, meanwhile, is not getting direction from the dollar movements as the inverse relation weakened. The dollar inched up to 78.66 from the day's starting level at 78.59, according to the dollar index which tracks the dollar movements versus a basket of major currencies.

Gold direction may change today after the release of euro zone growth data which is expected to expand 0.4% in the fourth quarter from 0.3% growth in the third quarter. German growth pace eased in the fourth quarter to 0.4%, following the 0.7% expansion recorded in the three months through September.

Among other precious metals, platinum edged down to $1830.10 from the day's opening at $1836.00, palladium plunged to $831.00 from $833.20 and silver ticked down to $30.52 from $30.57, as of 08:20 GMT.