* Gold one and three-month forward rates suggest increased borrowing * China June consumer inflation up more than expected * Gold-backed ETF outflow continues * Investors await U.S. June FOMC minutes Wednesday (New updates throughout, adds comment, adds second byline, NEW YORK to dateline) By Frank Tang and Clara Denina NEW YORK/LONDON, July 9 (Reuters) - Gold hit a one-week high on Tuesday, gaining 1 percent on strong physical demand, and as Chinese inflation data boosted the metal's appeal as a hedge. The metal's second consecutive daily gain was sparked by data showing China's annual consumer inflation accelerated more than expected in June. Signs of tightness in gold forward market also boosted investor sentiment. News that the 1-month and 3-month Gold Forward Offered Rates (GOFO), rates at which bullion banks are prepared to lend gold on a swap against U.S. dollars, fell for the first time in years underpinned gold prices. "Clearly there is some dislocation in the physical market and maybe because demand has been surprisingly strong that has caused some temporary shortages," said Societe Generale analyst Robin Bhar, adding that there has been a lot of gold borrowing in the last 24 hours . Spot gold touched its highest since July 2 at $1,260.01 an ounce earlier. It traded at $1,245.90 an ounce, up 0.9 percent by 3:34 PM EDT (1934 GMT) U.S. Comex gold futures for August delivery settled up $11 to $1,245.90 an ounce, as trading volume was 15 percent below its 30-day average, preliminary Reuters data showed. Liquidation in bullion-backed exchange traded funds continued, suggesting gold prices could come under renewed pressure, analysts said. Holdings in the SPDR Gold Trust, the world's largest gold ETF, fell to the lowest since February 2009, down 1.6 percent to 946.96 tonnes. Investors are now focusing on the Federal Open Market Committee (FOMC) minutes - records from the Fed's June meeting - due for release on Wednesday.
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