Gold Rises on Concern Over Europe Debt
Gold rose for a fourth straight session, the longest rally in three weeks, as Europe’s debt crisis increased investor demand for the precious metal as a protection of wealth.
Christian Noyer, a member of the European Central Bank’s governing council, yesterday ruled out a restructuring of Greece’s debt, calling it a “horror story” that would leave the nation shut out of financing for years. Gold priced in euros and British pounds climbed to records today as policy makers disagreed over how to solve Greece’s fiscal woes.
“We are bullish of gold in both U.S.-dollar terms and non- U.S.-dollar terms,” said Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter. “The trend here is clearly to the upside as the problems in Europe prove to be more and more intractable.”
Gold futures for August delivery rose $3.50, or 0.2 percent, to settle at $1,527.80 an ounce at 1:52 p.m. on the Comex in New York. The metal has gained 27 percent in the past year, touching a record $1,577.40 on May 2.
“The trump-card currency of choice is gold, and in all likelihood, it shall become even more readily embraced, not less so, in the days and weeks ahead as Europe’s problems worsen,” Gartman said.
Some European Union officials have supported a so-called reprofiling of Greece’s debt, whereby its payback period could be lengthened and interest costs may be reduced. Moody’s Investors Service is “very likely” to class a reprofiling of Greek debt as a default, according to Alastair Wilson, the company’s chief credit officer for Europe, the Middle East and Africa.
Gold has gained even as the dollar climbed against the euro.
“What is noteworthy is the divergence between gold and the greenback,” said Matt Zeman, a strategist at Kingsview Financial in Chicago. “People are looking for perceived safety because nobody knows what really will happen to the euro, and there are doubts about the future of the dollar as a powerhouse.”
Silver futures for July delivery rose $1.514, or 4.2 percent, to $37.642 an ounce on the Comex.
Palladium futures for September delivery advanced $12.10, or 1.6 percent, to $749.20 an ounce on the New York Mercantile Exchange. Platinum futures for July delivery gained $17.30, or 1 percent, to $1,779.80 an ounce on the Nymex.
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