Gold topped the $1,700 and ounce level today on concerns the Europe's debt woes may get worse. Many continue to flock towards the metal as a safe haven asset during times of turmoil and right now the European banking system is in a period of turmoil.
October 25, 2011, 12:36 PM EDT
By Debarati Roy and Nicholas Larkin
Oct. 25 (Bloomberg) -- Gold rose to a four-week high, topping $1,700 an ounce, as concerns that Europe’s debt woes may worsen spurred demand for the metal as a haven investment.
A meeting of European Union finance ministers scheduled for tomorrow was canceled, while the region’s banks clashed with politicians on a debt-relief plan for Greece, and an EU document showed that boosting the effectiveness of a bailout fund may require further talks. The Standard & Poor’s GSCI Index of 24 raw materials climbed as much as 1.3 percent, led by silver and crude oil.
“We saw some increased buying after the confusion about tomorrow’s meetings,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview today. “Also, the strength in the commodities pack is helping gold.”
Gold futures for December delivery gained 2.8 percent to $1,698.20 at 12:12 p.m. on the Comex in New York. Earlier, the price reached $1,701.20, the highest for a most-active contract since Sept. 23.
“Nobody really wants to go short on gold,” Bernard Sin, the head of currency and metal trading at bullion refiner MKS Finance SA in Geneva, said today by telephone. “I don’t think Europe will be out of the woods yet.’
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 advanced 16 percent this year.
Europe’s leaders prepared to meet tomorrow in Brussels for the second summit in four days in a bid to carve out a solution to the region’s debt crisis. They are seeking an agreement on bolstering the region’s rescue fund, recapitalizing banks and providing debt relief to Greece to avoid contagion spreading to Italy and Spain.
The Diwali religious festival this week in India, the world’s biggest gold buyer, also may spur physical demand, MKS Finance’s Sin said.
Silver futures for December delivery surged 2.8 percent to $32.545 an ounce, gaining for the third straight session.
--Editors: Daniel Enoch, Patrick McKiernan.
To contact the reporters for this story: Nicholas Larkin in London at email@example.com; Debarati Roy in Mumbai at firstname.lastname@example.org
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