NEW YORK (TheStreet ) -- Gold prices were gaining steam Tuesday as a higher-than-expected inflation reading in the U.K. prompted a rush into the metal.
Gold for February delivery was adding $10.70 to $1,371.20 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Tuesday has traded as high as $1,373.90 and as low as $1,356.80. The spot gold price was adding $11.60, according to Kitco's gold index.
The U.S. dollar index was slipping 0.64% to $78.89 while the euro added 0.70% to $1.33 vs. the dollar. The euro was stronger on hopes that the eurozone would expand its bailout fund. Although any big steps wouldn't be seen for months, the optimism of a stronger, more permanent solution was buoying the currency.
Also helping the euro was Greece's ability to raise €650 million in short- term funding without an interest rate increase. Germany reported in a study that investor confidence jumped as the country continues to grow its export business. A less wobbly euro was putting pressure on the dollar and helping to support gold prices.
"Gold is stronger ... boosted by bargain-hunting in Asia overnight," says William Adams, head of research of fastmarkets.com. "The weaker dollar is also helping."
Gold prices tanked 2% on Friday . The gold exchange-traded fund, SPDR Gold Shares(GLD_), lost almost 6 tons as investors dumped their holdings. Big price dips have often triggered physical buying from more price sensitive markets like China and India. China begins its New Year festivities when the Year of the Rabbit kicks off Feb. 3 and consumers are buying gold ahead the celebration.
Easy ways to provide gold to consumers is continuing. Bloomberg reported gold vending machines will hit Tokyo as protection against fiat currencies. The move follows other areas like Dubai and Florida which are installing or have installed similar machines. Although this probably won't move the needle on physical demand for gold products, it does serve as a vehicle for introducing gold to the masses.
Despite gold's 10-year rally and mass media coverage, most investors and average people don't own gold. In fact, they might be more apt to sell gold at high prices rather than buy it. Legendary investor Jim Rogers told me recently that at an event with 300 major international money managers 76% of them had never owned gold.
"I was stunned, so was the moderator, so was everybody, stunned at how few people actually had ever owned gold, so it's still an under-owned asset," he said.
