May 10 (Bloomberg) -- Gold rose on concern that Europe’s debt crisis will drive the euro lower, spurring demand for precious metals as alternative assets. Silver had the biggest two-day rally in six months after plunging 27 percent last week.
Standard & Poor’s yesterday downgraded Greece’s credit rating for the fourth time since April 2010, signaling that the region’s debt crisis is escalating. Gold advanced for the third straight session.
“Economic uncertainties in the monetary union and fears over peripheral debt were returning to the focus yet again,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said in a report. “In the short run, bullion is likely to remain well-supported, also helped by physical activity picking up in Asia amid seasonal demand.”
Gold futures for June delivery rose $13.70, or 0.9 percent, to settle at $1,516.90 an ounce at 1:50 p.m. on the Comex in New York. The price has climbed 2.4 percent in three days after tumbling 4.9 percent from May 3 to May 5. The metal reached a record $1,577.40 on May 2.
S&P lowered Greece’s credit rating to B from BB-, saying that further reductions are possible. Another cut would make Greece the lowest-rated nation in Europe.
“Given the regional issues still facing the global economy, which include sovereign debt, massive budget deficits, raised geopolitical unrest, currency debasement and inflation, gold is likely to remain sought after by a wide range of investors,” analysts at ScotiaMoccatta said in a report.
Gold may reach $2,000 by January, Hal Lehr, Deutsche Bank AG’s managing director for cross-commodity trading, said in an interview in Buenos Aires.
Silver futures for July delivery rose $1.37, or 3.7 percent, to $38.486 an ounce, bringing the two-day rally to 9.1 percent, the most since early November.
Last week’s plunge followed an 84 percent increase in margin costs announced by CME Group Inc., the Comex owner, over two weeks. The metal reached a 31-year high of $49.845 on April 25.
Palladium futures for June delivery rose $3.65, or 0.5 percent, to $732.65 an ounce on the New York Mercantile Exchange.
Platinum futures for July delivery gained $5.80, or 0.3 percent, to $1,800.90 an ounce.
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