As demand for an alternative investment grows, so does the price of gold as it continues to rise as concern grows for the European currency crisis. Gold has rallied nearly 10 percent since the end of September on news of all the turmoil.
By Debarati Roy and Nicholas Larkin
Nov 8, 2011 7:56 AM MT
Gold rose for a second straight day in New York on increased demand for an alternative asset as concern mounts that European leaders have been unable to contain the region’s debt crisis.
Italian Prime Minister Silvio Berlusconi faces a budget vote amid pressure to quit and a surge in borrowing costs. Federal Reserve Chairman Ben S. Bernanke signaled more monetary stimulus may be needed to cut unemployment, while the European Central Bank last week unexpectedly lowered interest rates. Gold has rallied 10 percent since the end of September.
“The turmoil in Europe has brought the fear trade back to gold,” Lance Roberts, the chief strategist and chief executive officer of Houston-based Streettalk Advisors, said in a telephone interview. “Also, a renewed wave of policy easing by central banks is helping gold.”
Gold futures for December delivery rose 0.3 percent to $1,796 an ounce at 9:55 a.m. on the Comex in New York. Prices reached $1,799.90 yesterday, the highest since Sept. 21.
Berlusconi must show today that he has enough support in parliament to stay in power and implement austerity measures to trim the region’s second-biggest debt and bring down borrowing costs.
“Fundamentals are stronger than before, with Italy on the brink of default and the EU crisis more complicated than before,” Pradeep Unni, an analyst at Richcomm Global Services in Dubai, said in a report to investors. “Retracements and corrections are possible as we climb above $1,800, but stay invested.”
Bullion is in the 11th year of a bull market, and futures reached a record $1,923.70 in New York on Sept. 6 as investors sought to diversify away from equities and some currencies. Before today, the metal gained 26 percent this year.
Silver futures for December delivery advanced 0.3 percent to $34.93 an ounce on the Comex.
To contact the reporters for this story: Nicholas Larkin in London at firstname.lastname@example.org; Debarati Roy in New York at email@example.com.
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