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Gold Rises for Second Day as Greek Debt Spurs Demand for Haven

Gold futures rose for the second straight session on concern that Greece will default on its debt, spurring demand for the metal as a haven. Silver climbed.

Today was the original target date for approving an 8 billion-euro ($10.7 billion) loan payment to Greece, the sixth installment of the 110 billion-euro lifeline assembled in May 2010. That decision was pushed back until mid-October. In September, gold tumbled 11 percent, the most since October 2008, as financial turmoil in Europe prompted sales of the metal to cover losses in other markets.

“The selling is exhausted, and gold is back to trading more like a currency again,” James Dailey, who manages $215 million at TEAM Financial Management LLC in Harrisburg, Pennsylvania, said in an e-mail. “The potential for a controlled default in Greece appears to be increasing.”

Gold futures for delivery in December jumped $35.40, or 2.2 percent, to settle at $1,657.70 an ounce at 1:51 p.m. on the Comex in New York. The metal gained 0.3 percent on Sept. 30. The price has climbed 17 percent this year, reaching a record $1,923.70 on Sept. 6.

On Sept. 30, holdings in gold-backed exchange-traded products rose 0.2 percent, the first increase in a week, to 2,213.6 metric tons, according to data compiled by Bloomberg.

“We expect physical demand to be quite decent in the coming days,” Edel Tully, an analyst at UBS AG in London, said in a report. “After the recent washout, gold positioning is far from extended, and this is quite a bullish signal for price strength ahead.”

Silver futures for December delivery jumped 71.2 cents, or 2.4 percent, to $30.795 an ounce on the Comex. In the third quarter, the metal tumbled 14 percent, the most in three years.

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