Gold Futures Advance on Greek Debt Concerns, Dollar’s Decline

Gold futures rose as mounting European debt woes and the dollar’s drop spurred demand for the metal as an alternative asset.

German Chancellor Angela Merkel said she won’t let Greece go into “uncontrolled insolvency” as politicians try to limit contagion to other euro members. Greece’s budget gap widened 22 percent in the eight months ended Aug. 31. The greenback fell as much as 1 percent against a basket of six major currencies.

“Concerns about Greece have not abated,” Sterling Smith, an analyst at Country Hedging Inc. in St. Paul, Minnesota, said in a telephone interview. “The weaker dollar is also lending support.”

Gold futures for December delivery gained $16.80, or 0.9 percent, to close at $1,830.10 an ounce on the Comex at 2:01 p.m. in New York. The price rose as high as $1,847.50 in trading after the settlement. The metal has climbed 29 percent this year, reaching a record $1,923.70 on Sept. 6.

Greece’s perceived chance of default in the next five years has soared to 98 percent, based on a standard pricing model of credit-default swaps.

“The debt crisis of euro-zone peripherals remains the dominant issue,” Daniel Briesemann, an analyst at Commerzbank AG in Frankfurt, said in a report. “Gold should remain in demand as a safe haven.”

Silver futures for December delivery gained 97.6 cents, or 2.4 percent, to $41.193 an ounce on the Comex. The price has gained 33 percent this year.

On the New York Mercantile Exchange, platinum futures for October delivery rose $4.10, or 0.2 percent, to $1,813.50 an ounce. Palladium futures for December delivery climbed $17.15, or 2.4 percent, to $728.50 an ounce.