Gold is poised for a run toward its May all-time high on Tuesday as investors sought a safe haven on fears that European officials were failing to stop a debt crisis from spreading to Italy and Spain. After trading flat for most of the day, bullion suddenly spiked at the end of the US pit session as the euro remained sharply weaker, extending its rally for a seventh day.
Bullion has gained around 6 percent this month on fears about a deepening eurozone crisis, now trading less than 1 percent below its all-time high of $1,575.79 set on May 2. Gold priced in euro and sterling hit record highs for a second consecutive day. "If you live in Greece, you are going to buy gold because that's the hard money you still trust, and we know that the Federal Reserve wants to debase the dollar," said Axel Merk, portfolio manager who oversees $700 million in mutual fund assets at Merk Investments.
"If a lot of people believe that gold is the alternative currency, its price will be going up," Merk said.
Spot gold was up 0.6 percent at $1,562.79 an ounce by 1:58 pm EDT (1758 GMT). US COMEX August gold futures settled up $13.10 at $1,562.30. Gold in euros rose nearly 1 percent for a third day to 1,116.08 euros an ounce, having hit a record 1,118.58 earlier.
Gold priced in higher-yielding currencies, which also suffered the brunt of investor distaste for risk, such as the Australian dollar, the South African rand or the Canadian dollar, also rallied. Independent investor Dennis Gartman, who has called for buying gold in non-US currency terms, however, has trimmed his euro-priced gold positions on worries about an overbought trade.
"Everywhere we turned yesterday the talk was of the gold/euro trade. In that environment it is perhaps wise if we remove ourselves quietly from the party, reducing our exposure by one-third...," Gartman said in a note. Bullion also benefits on fears that the debt crisis is spilling over the other European countries. The main measure of Italy's borrowing costs broke above 6 percent for the first time in 14 years as the eurozone's third-largest economy was sucked into the bloc's debt crisis. Spot silver gained 0.5 percent to $35.85 an ounce. Among platinum group metals, platinum was up 0.8 percent at $1,734.99 an ounce, while palladium rose 0.2 percent to $765.25.
Comments
Comments are closed.