Gold rose on concerns that Europe's leaders will not do enough to relieve the debt crisis that has been a major problem in the area. As a result of these concerns, demand for the metal has rose as a safe haven investment.
By Nicholas Larkin and Debarati Roy
October 24, 2011, 10:13 AM EDT
Oct. 24 (Bloomberg) -- Gold rose for a second straight session on concern that Europe’s leaders won’t do enough to stem the region’s debt crisis, boosting demand for the metal as a haven investment.
Policy makers ruled out tapping the European Central Bank’s balance sheet to boost the region’s rescue fund and outlined plans to aid banks. Gold also rose on concern that U.S. monetary policy aimed at shoring up growth will spur inflation. Federal Reserve Vice Chairman Janet Yellen said on Oct. 21 that a third round of large-scale securities purchases may become warranted to boost the U.S. economy.
“Gold is being pushed up as a safe-haven bet,” Fred Schoenstein, a trader at Heraeus Precious Metals Management in New York, said in a telephone interview. “Everyone wants to know the details from Europe.”
Gold futures for December delivery gained 1.1 percent to $1,654.40 an ounce at 9:49 a.m. on the Comex in New York. On Oct. 21, the precious metal jumped 1.4 percent.
Bullion is in the 11th year of a bull market and futures reached a record $1,923.70 on Sept. 6 as investors sought to diversify away from equities and some currencies. Before today, the metal gained 15 percent this year.
“Gold investor interest has stabilized, and physical demand continues to emerge, albeit at softer levels,” Suki Cooper, an analyst at Barclays Capital in New York, wrote today in a report. “We continue to expect gold prices to be cushioned amid the seasonally strong period for demand, and this remains key before investment demand returns to the driver’s seat. We retain our positive view on gold, given the macro backdrop.”
Silver futures for December delivery rose 1.6 percent to $31.685 an ounce. Before today, prices climbed 3.7 percent this month.
--Editors: Millie Munshi, Daniel Enoch
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