Bloomberg News

Gold Approaches Record High on Haven Demand Amid Debt Anxiety

July 22, 2011

July 22 (Bloomberg) -- Gold approached a record high on demand for an investment haven amid persistent debt concerns in the U.S. and Europe.

Greece faces a “restricted default,” Fitch Ratings said, after European leaders agreed yesterday to an additional bailout. U.S. lawmakers are still debating on raising the $14.3 trillion debt ceiling before the government runs out of cash on Aug. 2. Gold reached a record $1,610.70 an ounce on July 19.

“There’s a clamor for gold as the printing presses go off around the world,” Adam Klopfenstein, a strategist at Lind- Waldock, a broker in Chicago, said in a telephone interview. “The U.S. and Europe have structural problems, and there’s a camp of investors that are willing to buy until these problems are fixed.”

Gold futures for August delivery rose $17.20, or 1.1 percent, to $1,604.20 at 11:10 a.m. on the Comex in New York. Earlier, the metal reached $1,607.70. The price headed for the third straight weekly gain.

On July 20, total open interest in Comex futures climbed to a six-month high of 546,601 contracts.

Europe’s leaders yesterday announced 159 billion euros ($229 billion) of new aid for Greece, including a pledge by banks to exchange and buy back the nation’s debt, which may result in a short-term default.

President Barack Obama and House Speaker John Boehner are pressing for a broad accord to boost the debt limit while cutting spending by trillions of dollars and overhauling the tax code.

‘Contagion Risks’

“Real contagion risks remain, as do currency risks,” GoldCore Ltd., a broker in Dublin, said in an e-mail. “The dollar and the euro remain vulnerable to further debasement and depreciation.”

Silver futures for September delivery rose $1.048, or 2.7 percent, to $39.995 an ounce on the Comex, heading for the third straight weekly gain.

Palladium futures for September delivery fell $1.35, or 0.2 percent, to $807.65 an ounce on the New York Mercantile Exchange. Platinum futures for October delivery rose $10.20, or 0.6 percent, to $1,798 an ounce. The metals headed for the fourth straight weekly gain.

--Editors: Patrick McKiernan, Steve Stroth

To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net.


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