Gold climbed to the highest in more than three months after missed debt payments by a company linked to Portugal’s second-largest bank and Middle East tension spurred demand for a haven. Palladium reached a 13-year high.
While Portugal’s central bank said Banco Espirito Santo SA is protected after its parent missed debt payments, Moody’s Investors Service downgraded a company in the group citing a lack of transparency and links to other companies. Equities and bonds of Europe’s most-indebted nations declined as speculation resurfaced that the euro region remains vulnerable to shocks as it emerges from the sovereign debt crisis.
Minutes of the Federal Reserve’s June meeting released yesterday showed some officials expressed concern investors may be complacent about the economic outlook. Gold rose 12 percent this year as the Fed pledged to keep interest rates low for a “considerable time” and amid tension in the Middle East and Ukraine. Israel has mobilized 20,000 soldiers for a possible ground invasion of the Gaza Strip, as militants there extended their rocket barrage and the Palestinian death toll increased.
“With Portugal, it’s not a good sign and it will support the market,” Bernard Sin, the head of currency and metal trading at MKS (Switzerland) SA, a Geneva-based refiner, said today by phone. “We might see that part of the world shift into precious metals. The geopolitical situation is very tense, particularly in the Middle East.”
Gold for August delivery rose 1.4 percent to $1,343 an ounce by 8 a.m. on the Comex in New York. It reached $1,345.80, the highest since March 19. Bullion for immediate delivery advanced 1.1 percent to $1,342.24 in London, according to Bloomberg generic pricing.