Gold rises over 1 percent on euro zone debt worries

By Frank Tang

NEW YORK (BestGrowthStock) – Gold rallied more than 1 percent on Tuesday as a sharp decline of the euro and signs of a deepening euro zone’s debt crisis prompted investors to buy gold to hedge against currency and economic uncertainties.

Both gold and silver were higher for a fourth consecutive month, with gold rising 2 percent and silver climbing more than 13 percent for November.

Gold benefited from investor fears that Ireland’s debt problems, despite the EU approving an emergency aid package, could spread to other bloc members such as Portugal and Spain, and borrowing costs of other countries such as Italy, Belgium and France shot higher.

“When the euro slipped under $1.30 range, it triggered a new wave of safe-haven buying,” said Frank McGhee, head precious metals trader of Integrated Brokerage Services. “If you are holding your assets in euro, you are very afraid.”

The euro slid across the board, plunging to 2-1/2 month lows against the U.S. dollar. The euro was down nearly 7 percent on the month, heading for its worst monthly performance since May when Greece received a 110 billion-euro bailout.

Spot gold rose 1 percent to $1,382.05 an ounce at 2:35 p.m. EST, having earlier hit a 2-1/2 week peak of $1,389.75, the loftiest level since November 12.

U.S. gold futures for February delivery settled up $18.60 an ounce at $1,386.10. U.S. silver futures were 15 percent higher for November, the best performing commodity in the Reuters/Jefferies CRB index.

U.S. gold volume was 30 percent below its one-month average, as most investors have completed rolling over to February contracts from December futures. The first notice day for December was Tuesday.

Silver climbed 2.8 percent to $27.87 an ounce, helped by speculative buying and strong retail bullion demand.

The U.S. Mint’s American Eagle silver coins sales are set to rise to a record above 4 million ounces in November, as the European debt crisis and economic uncertainty prompted individual investors to bet on silver and gold as safe havens.

U.S. silver volume was also back in line with average at nearly 90,000 lots after posting a sharply higher turnover in the previous session.

With risk aversion running high, the typical inverse link to the dollar collapsed, with the 25-day gold/dollar correlation at its weakest in two months.

“Even the strong U.S. dollar could not push gold in dollar terms lower,” said Eugen Weinberg, an analyst at Commerzbank. “This suggests that the U.S. dollar is not perceived as the primary safe haven right now, but rather gold.”

Spanish and Italian government bond yields hit euro lifetime highs on Tuesday after an Irish bailout failed to quell concerns about peripheral debt.

IBS’ McGhee said that technical buying boosted gold as the metal was on the verge of breaking out of a bearish potential head-and-shoulder chart pattern.


Euro-priced gold jumped some 2 percent to a record high at 1,067.93 euros an ounce, posting its biggest monthly gain since May — up 9 percent — when concerns over Portugal’s financial health first battered the markets.

The world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings rose to 1,286.603 tonnes by November 29 from 1,285.084 tonnes on November 22.

In the official sector, the International Monetary Fund has slowed the rate of selling its gold by 40 percent in October from the previous month, as interest among central banks to own the metal as a hedge against economic uncertainty rose.

For platinum group metals, ETF Securities said in a SEC filing it is launching a new exchange-traded product on the New York Stock Exchange backed by a basket of silver, platinum and palladium, the company’s sixth U.S. product.

Palladium posted its fifth straight monthly rise, up 7.9 percent on the month and about 1 percent higher at $695.72 on Tuesday.

Platinum was up 0.9 percent at $1,658.24 an ounce. On a monthly basis, it bucked the overall positive trend in the complex, heading for a more than 2 percent drop, its first monthly decline since August. Prices at 3:21 p.m. EDT (2121 GMT)


CLOSE CHG CHG CHG US gold 1386.10 18.60 1.4% 26.4% US silver 28.212 1.019 0.0% 67.5% US platinum 1666.40 21.80 1.3% 13.3% US palladium 703.00 8.15 1.2% 71.9% Gold 1383.85 15.76 1.1% 26.2% Silver 27.99 0.87 3.2% 66.2% Platinum 1656.49 13.25 0.8% 13.0% Palladium 695.47 6.47 0.9% 71.5% Gold Fix 1383.50 8.50 0.6% 25.3% Silver Fix 27.13 39.00 1.5% 59.7% Platinum Fix 1658.00 7.00 0.4% 13.1% Palladium Fix 702.00 5.00 0.7% 74.6%

(Additional reporting by Elizabeth Fullerton and Jan Harvey in London; Editing by Lisa Shumaker)

Gold rises over 1 percent on euro zone debt worries