Aug. 2 (Bloomberg) -- Gold futures topped $1,660 an ounce, extending a rally to a record, as escalating concern that the global economy is losing momentum spurred demand for the precious metal as an investment haven.
U.S. equities headed for the longest slump since 2008 after a report showed that consumer spending unexpectedly dropped in June for the first time in almost two years. President Barack Obama signed a debt-limit compromise, preventing a default. Gold has gained 39 percent in the past year amid low interest rates and two rounds of “quantitative easing” by the Federal Reserve to revive the economy.
“At the end of the day, they’ve got an extended check and a contracting economy,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview. “That puts pressure right back on the Fed to go to a QE3. Every reason we’ve ever had to buy gold is coming up in spades.”
Gold futures for December delivery rose $22.80, or 1.4 percent, to close at $1,644.50 at 1:45 p.m. on the Comex in New York. The metal reached $1,661.90 in electronic trading after the settlement.
Gold also climbed to all-time highs in euros, pounds and Canadian dollars as manufacturing indexes in the U.S., Europe and China declined in July.
“The flight-to-quality money is flowing into gold,” Adam Klopfenstein, a senior strategist at MF Global Holdings Ltd. in Chicago, said in a telephone interview. “There’s a lot of uncertainty about the global economic recovery.”
Yesterday, holdings in exchange-traded products backed by gold climbed 1.4 metric tons to a record 2,153.6 tons, data compiled by Bloomberg show.
The U.S. still faces the prospect of a credit-rating downgrade, Bill Gross, who runs the world’s biggest bond fund, said yesterday on PBS’s Nightly Business Report.
--Editors: Patrick McKiernan, Millie Munshi
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