SINGAPORE (Reuters) - Gold climbed for a second session on Thursday on U.S. inflation data and as holdings in the world's biggest gold-backed exchange traded fund rose for the second time in a week.
FUNDAMENTALS
Spot gold had gained 0.5 percent to $1,340.74 an ounce by 0012 GMT.
It rose around 1 percent in the previous session as broad gains in commodities and signs of simmering inflation lifted bullion after Tuesday's drop.
U.S. producer prices were flat in July, which could add to worries at the Federal Reserve that inflation is running too low, indicating the U.S. central bank might not end its stimulus until inflation begins to trend higher.
The Fed risks pushing inflation even lower if it tapers bond purchases too aggressively and could take a more cautious approach by initially only scaling back by a small amount, a senior central banker said on Wednesday.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.23 percent to 913.23 tonnes on Wednesday.
SPDR holdings rose for the first time since June 10 last Friday and had remained unchanged before the increase on Wednesday, raising hopes that the worst of outflows from the fund is over.
India turned the screw on gold buying again on Wednesday, banning imports of coins and medallions and making domestic buyers pay cash, a day after hiking bullion import duty to a record 10 percent.
Paulson & Co more than halved its stake in the world's biggest gold-backed exchange-traded fund, SPDR Gold Trust, in the second quarter as bullion prices fell.
(Reporting by A. Ananthalakshmi; Editing by Joseph Radford)
