Gold future rose on Europe's continued debt crisis and escalating tensions in Egypt. Investors are now drawn to the metal as a safe-haven asset amid turmoil. Physical gold purchases continue to increase as many investors see the lower prices as a buying opportunity.
By Debarati Roy & Nicholas Larkin
Jul 3, 2013 6:49 AM MT
Gold futures rose as Europe’s debt crisis and escalating tensions in Egypt spurred demand for the precious metal as a haven. Silver also advanced.
Two Portuguese ministers resigned from the government and borrowing costs also increased in Spain and Italy. Egypt’s President Mohamed Mursi rejected an ultimatum by the armed forces to solve the country’s political impasse. Gold futures dropped 23 percent in the second quarter, the most since at least 1975.
“Europe’s debt struggle is back in the forefront, and that is bringing some people to gold as a safety net,” Carlos Perez-Santalla, a New York-based broker at Marex North America LLC, said in an e-mailed report. “Some speculators are moving to gold because of the situation in Egypt.”
Gold futures for August delivery gained 0.4 percent to $1,248.50 an ounce at 9:46 a.m. on the Comex in New York. Prices touched $1,179.40 on June 28, the lowest since Aug. 2, 2010. U.S. markets will be closed tomorrow for the Independence Day holiday.
Bullion slipped 26 percent this year through yesterday, wiping $60.1 billion from the value of gold-backed exchange-traded product holdings, as some investors lost faith in it as a store of value and amid concern that the Federal Reserve may slow its asset purchases this year.
Physical gold purchases continue to increase, and some investors are seeing lower prices as “an opportunity to jump in,” Scott Carter, the chief executive officer of Los Angeles-based Lear Capital, said in a Bloomberg Television interview.
Silver futures for September delivery climbed 1.5 percent to $19.59 an ounce in New York. The metal reached $18.17 on June 28, the lowest since August 2010, and is the worst performer in the Standard & Poor’s GSCI Spot Index of 24 commodities this year.
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