May 20 (Bloomberg) -- Gold futures rose the most this month after Fitch Ratings cut Greece’s credit rating, boosting the appeal of the precious metal as a haven asset.
The euro tumbled as much as 1.2 percent against the dollar after Fitch said a “soft” restructuring of Greece’s debt by European Union policy makers would be considered a default. Europe’s financial crisis, accelerating inflation and fighting in Libya have helped extend gold’s rally into an 11th year, with prices reaching a record $1,577.40 an ounce on May 2.
“Gold is screaming higher,” said Matthew Zeman, a strategist at Kingsview Financial in Chicago. “People are buying gold as a hedge against the uncertainty in Europe. There’s a lot of focus again on the euro zone debt crisis.”
Gold futures for June delivery rose $16.50, or 1.1 percent, to settle at $1,508.90 at 1:49 p.m. on the Comex in New York, the biggest gain since April 29. The price, up 1 percent this week, has climbed 6.2 percent this year.
“There’s a gravitation toward investments that are paperless,” said Adam Klopfenstein, a senior strategist at Lind-Waldock, a broker in Chicago. “Europe’s debt problems are back under the microscope.”
Gold also gained on signs that demand is increasing in China, where inflation is accelerating.
China’s consumer prices rose 5.3 percent in April from a year earlier, topping the 2011 government target of 4 percent for a fourth straight month. Since mid-October, the central bank has raised interest rates four times to rein in lending.
“When you hear that a large population source like China wants to own gold, that bodes well for the metal,” Klopfenstein said.
Silver futures for July delivery rose 15.5 cents, or 0.4 percent, to $35.087 an ounce. The price, up 0.2 percent this week, has climbed 13 percent this year. The metal has tumbled 30 percent from a 31-year high of $49.845 on April 25.
Palladium futures for June delivery rose $7.35, or 1 percent, to $735.50 an ounce on the New York Mercantile Exchange. The price, climbed 4.1 percent this week. The metal has dropped 8.4 percent in 2011.
Platinum futures for July delivery rose 40 cents to $1,769.40 an ounce. The price, little changed this week, has dropped 0.5 percent in 2011.
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