Tags: Gold | record | Slowing | Growth

Gold Surges to Record as Fragile Global Economy Bolsters Demand for Haven

Tuesday, 02 Aug 2011 09:26 AM

Gold futures surged to a record $1,647.80 an ounce as escalating concern that the global economy is losing momentum spurred demand for the precious metal as an investment haven.

U.S. equities headed for the longest slump since 2008 after a report showed that consumer spending unexpectedly dropped in June for the first time in almost two years. Manufacturing indexes in the U.S., Europe and China declined in July. Gold climbed to all-time highs in euros, pounds and Canadian dollars.

“The flight-to-quality money is flowing into gold,” Adam Klopfenstein, a senior strategist at MF Global Holdings Ltd. in Chicago, said in a telephone interview. “There’s a lot of uncertainty about the global economic recovery.”

Gold futures for December delivery rose $22.80, or 1.4 percent, to close at $1,644.50 at 1:45 p.m. on the Comex in New York. The price has gained 39 percent in the past 12 months. The metal extended the rally to the record in electronic trading after the settlement.

Yesterday, holdings in exchange-traded products backed by gold climbed 1.4 metric tons to a record 2,153.6 tons, data compiled by Bloomberg show.

Earlier, Congress approved a plan to raise the U.S. debt ceiling, heading off a U.S. default. President Barack Obama signed the measure on the day the Treasury had said the nation’s borrowing authority would expire.

The U.S. still faces the prospect of a credit-rating downgrade, Bill Gross, who runs the world’s biggest bond fund, said yesterday on PBS’s Nightly Business Report.

Rating ‘Fears’

“Economic uncertainty and fears of a downgrade” in the U.S. are boosting gold, Andrey Kryuchenkov, an analyst at VTB Capital in London, said in a report. “Weak macro numbers would also delay the tightening cycle in the U.S.”

Silver futures for September delivery rose 78.3 cents, or 2 percent, to $40.092 an ounce on the Comex. The metal has more than doubled in the past year.

Palladium futures for September delivery fell $2.60, or 0.3 percent, to $826.90 an ounce on the New York Mercantile Exchange.

Platinum futures for October delivery fell $1.10 to $1,793.50 an ounce.

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Gold futures surged to a record $1,647.80 an ounce as escalating concern that the global economy is losing momentum spurred demand for the precious metal as an investment haven. U.S. equities headed for the longest slump since 2008 after a report showed that consumer...
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2011-26-02
Tuesday, 02 Aug 2011 09:26 AM
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