* 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.
http://www.reuters.com/article/2013/07/09/markets-precious-idUSL4N0FF1K920130709
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