Gold futures continue to rise on news of uncertainty growing in the euro zone. Investors feel that the situation in Europe is going to get worse before it gets any better and therefore, many are investing in gold as a safe haven.
By Debarati Roy and Nicholas Larkin
November 07, 2011, 10:35 AM EST
Nov. 7 (Bloomberg) -- Gold futures rose to a six-week high as Europe’s escalating sovereign-debt crisis spurred demand for a haven.
Italian Prime Minister Silvio Berlusconi’s allies pressured him to step aside after contagion from the region’s fiscal woes pushed the nation’s borrowing costs to euro-era records. Gold jumped to a record $1,923.70 an ounce on Sept. 6 on demand for an alternative to equities and some currencies.
“The problems in Europe are not disappearing in a hurry, and there is so much confusion,” Thorsten Proettel of Landesbank Baden-Wuerttemberg in Stuttgart, Germany, said in a telephone interview. “There is a basis for gold to continue to rise.”
Gold futures for December delivery gained 1.5 percent to $1,781.70 at 9:53 a.m. on the Comex in New York. Earlier, the metal reached $1,784.20, the highest for a most-active contract since Sept. 22. Before today, the commodity climbed 24 percent this year.
Berlusconi struggled to keep his allies in line after some lawmakers announced defections before critical parliamentary votes in coming days.
“Gold is responding to the general market mood that the European crisis will develop much worse before it gets better,” said Bayram Dincer, an analyst at LGT Capital Management in Pfaeffikon, Switzerland. “At the moment, we do not have a foreseeable lasting solution and high uncertainty remains.”
Silver futures for December delivery gained 2.1 percent to $34.81 an ounce. Before today, the metal climbed 10 percent this year.
--With assistance from Marco Bertacche in Milan. Editors: Patrick McKiernan, Daniel Enoch
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