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Gold nears record as econ bears circle mkts
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LONDON: Gold rose for a third day on Wednesday to verge on another record high and silver hit a 2-1/2 year peak as the waves of nervousness over the global economy steered investors into perceived safe-haven assets.
Spot gold was bid at $1,257.90 an ounce at 1500 GMT, against $1,253.10 late in New York on Tuesday, having hit a session high of $1,262.25. US gold futures for December delivery rose $0.80 to $1,260.20.
Silver reached a session high of $20.14 an ounce and was bid at $19.97 an ounce against $19.83. Gold has risen by about 15 per cent so far in 2010, marking ten years of continuous increases, and looks set for its third all-time high this year. It last hit a record $1,264.90 in June.
The rally has been driven in large part by the emergence of the difficulties of several euro-zone member states in covering the spiralling cost of financing their debt burdens as the regional economy sputtered.
Evidence of cracks in the U.S economic recovery and cooler Chinese data, combined with doubt about the strenuousness of stress tests conducted on European banks has created a springboard for investors to dive into gold.
UBS precious metals strategist Edel Tully said she had upgraded her gold price forecasts based on gold's traditional outperformance in September, coupled with safe-haven demand emanating from the focus on sovereign fiscal burdens.
"Given the range of factors conspiring to push gold higher in September, we raise our one-month forecast to $1,300, from $1,230 previously. We also lift our three-month target to $1,300, from $1,200 previously," she wrote in a report.
Also supporting prices was news that China, the world's biggest gold miner, saw a fall in output in July. The country is a major consumer of gold, and speculation its output may fail to satisfy domestic demand is likely to firmly underpin prices. Elsewhere platinum was at $1,562.00 an ounce against $1,553.03, and palladium was at $526.00 against $520.85. -Reuters
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