Gold rose for a second straight day as mounting government debt in Europe boosted demand for the precious metal as a haven.
The euro declined against the dollar after Moody’s Investors Service cut Portugal’s credit rating to junk, renewing concerns another European nation will need a bailout. Gold fell in the previous two weeks as Greece avoided a default.
“You’re getting a flight-to-quality fear coming in for gold,” said Adam Klopfenstein, a senior market strategist at broker Lind-Waldock in Chicago. “With the anxieties in Portugal and the ongoing debt-ceiling problems in the U.S., there are too many bullish cases for gold.”
Gold futures for August delivery rose $16.50, or 1.1 percent, to settle at $1,529.20 an ounce at 1:43 p.m. on the Comex in New York. The metal advanced 2 percent yesterday.
Prices have climbed 28 percent in the past 12 months as escalating sovereign-debt woes and record-low U.S. borrowing costs increased the appeal of the metal as an alternative to currencies. The price denominated in euros reached an all-time high on May 25.
Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter, recommended holding gold in foreign currencies to hedge against the relative strength of the dollar.
“We remain bullish of gold in non-U.S. dollar terms,” Gartman said in his daily note. “In the course of the past two days, what had been a position under attack has become a position of authority once again.”
Silver futures for September delivery rose 50.6 cents, or 1.4 percent, to $35.916 an ounce on the Comex.
Platinum futures for October delivery fell $8.70, or 0.5 percent, to $1,733.40 an ounce on the New York Mercantile Exchange.
Palladium futures for September delivery slipped $2.45, or 0.3 percent, to $773.20 an ounce on the Nymex.
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