Palladium contract rallies as copper bucks sector’s upward trend.
Gold futures rose to a record Tuesday, spurred by continued fears about prospects for a worldwide slide into recession and as investors sought out an alternative to currencies.
Gold for August delivery, the most active contract, added $6.40, or 0.5%, to $1,246.10 an ounce on the Comex division of the New York Mercantile Exchange. Gold settled at $1,243.10 on May 12.
“We see people buying gold for safety. Gold is in effect trading as a currency,” said Frank Lesh, a broker and analyst at FuturePath Trading in Chicago. “Every couple of weeks you hear about more (sovereign) debt problems from a different country.”
Gold also has set fresh record prices in euros, the British pound, the Indian rupee, the South African rand and the Chinese yuan, among others, according to analysts at Barclays Capital.
“The strength of investment demand has offset weakness in physical supply and demand flows. … The motives to support continued interest in gold remain intact for now, thus prices are likely to retain their recent gains barring short-term corrections amid profit-taking,” the Barclays analysts wrote Tuesday.
An immediate catalyst for gold’s run may have been recent weakness in U.S. equities, said James Cordier, portfolio manager at OptionSellers.com in Tampa, Fla. “A lot of money came out of securities and into gold in these last couple of days,” he said.
Gold futures overcame a weak start on Monday to close just $2.30 an ounce short of the May 12 record.
U.S. stocks traded in a choppy pattern Tuesday, initially drawing support from comments made late Monday by Federal Reserve chief Ben Bernanke before gains faded into losses.
Bernanke said he didn’t expect to see a double-dip recession in the U.S. That was tempered, however, by ongoing concerns about Europe’s economic health as Fitch Ratings warned that the U.K. faces enormous budget problems.
Gold is set to benefit whether or not financial markets stabilize, OptionSellers.com’s Cordier said. “Gold rallies either way,” benefiting from inflation concerns if markets do straighten out and from safe-haven buying if they don’t, Cordier said.
Meanwhile, silver was again tracking gold, with the July contract rising 25 cents, or 1.4%, to $18.42 an ounce. The silver contract had rallied 5% on Monday.
Palladium for September delivery, the most active contract, advanced $11.65, or 2.7%, to $442 an ounce. July platinum added $9.20, or 0.6%, to $1,525.80 an ounce.
However, copper bucked the positive metals trend. July copper retreated 3 cents, or 1.2%, to $2.73 a pound, the lowest price since October 2009.
By Claudia Assis
Tags: business investment, Debt, debt crisis, economy recovery, financial markets, inflation, investor market, money, recession, us stocks
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