Gold climbs for the second day after China’s central bank resumes purchases

Gold is up $30 today to build on a similar-sized gain yesterday.

Both gains come on the heels of the People’s Bank of China resuming gold purchases in November for the first time in six months. China is looking to diversify reserves into gold and away from US dollars in what’s expected to be a multi-year move.

Officials didn’t say why they halted purchases in May but it was believed to be price sensitivity as gold rose above $2400. The new buys above $2600 indicate a change of heart.

Technically, the main hurdle is the late-November high of $2721 but $2700 will also restrain bids. Helping the buyers is a positive seasonal backdrop for gold that runs through January.

In the shorter term, eyes are on US CPI tomorrow and headlines out of China’s work conference later this week.

This article was written by Adam Button at www.forexlive.com.