The price of gold climbed to its highest level in nearly two weeks on Monday after a raft of unsettling news on indebted eurozone nations such as Greece and Italy dented investor confidence. The precious metal maintained its positive tone even as the dollar strengthened against the euro and most other commodity markets crumbled, signalling bullion's appeal as a hedge against the mounting crisis in Europe.
"Gold is doing relatively well. This whole sovereign debt crisis will continue to be with us for quite some time and I'd suspect people will want the exposure to gold as a hedge against any sovereign defaults," said Bart Melek, head of commodity Strategy with TD Bank Financial Group.
Spot gold rose by as much as 0.67 percent on the day to hit $1,517.49 an ounce, its highest since May 11, before backing away to $1,513.40 by 1623 GMT. Gold priced in euros hit a record high of 1,080.04 euros an ounce. The trigger for gold's rise was the decision on Friday by ratings agency Fitch to cut Greece's debt ratings by three notches. Safe-haven bids gathered steam as doubts grew about Spanish austerity measures and Italy suffered a credit outlook downgrade.
In New York, June gold futures were up $4.80 to $1,513.70 an ounce by midday, after touching its own near two-week peak at $1,519. With prices maintaining momentum above $1,500 an ounce, more consolidation was in store, participants said. "This market is just at its equilibrium for the time being," said George Nickas of commodities futures broker FC Stone. Data from the Commodity Futures Trading Commission on Friday backed his view.
Gold has fallen by nearly 3.5 percent so far in May, compared with a 28-percent drop in spot silver, a 13.3 percent fall in Brent crude futures and a 6-percent fall in benchmark copper. Spot silver was down $34.97 ounce. US silver futures fell 16.70 cents to $34.92 an ounce. Platinum shed more than a percent to $1,749.99 from $1,768.50. Palladium was down at $725.47. Platinum ETFs shed 18,000 ounces of metal last week in their largest weekly decline since the week of March 25. Palladium ETF holdings have fallen for five weeks on the trot now, down 48,000 ounces last week.