Gold gained for a second day in New York as concern Europeâ€™s sovereign-debt crisis is worsening spurs demand for the metal as a protection of wealth.
The euro reached a four-month low versus the dollar after Fitch Ratings downgraded Greeceâ€™s long-term credit rating, citing heightened risk that the nation may not be able to sustain membership in the monetary union. Bullion jumped 2.5 percent yesterday, the most since October, as a U.S. report showed manufacturing in the Philadelphia region unexpectedly shrank in May for the first time in eight months.
â€œTo see a return of gold reacting positively to macro stresses is indeed refreshing, but it is still far too early to make any firm conclusions from here that gold has indeed turned the corner,â€ Edel Tully, an analyst at UBS AG in London, wrote in a report today. â€œFollow-through buying will have to kick in to encourage investors to jump in.â€
Gold for June delivery gained 1 percent to $1,590.70 an ounce by 7:58 a.m. on the Comex in New York. Prices are up 0.4 percent this week. Bullion for immediate delivery was 1.1 percent higher at $1,591.70 in London
Gold is up 1.5 percent this year after 11 consecutive annual increases. It slumped the previous two weeks as a stronger dollar cut demand for the metal as an alternative asset. Holdings in bullion-backed exchange-traded products rose 3.3 metric tons to 2,381.8 tons yesterday, about 1.2 percent below the March 13 record, data compiled by Bloomberg show.
Gold reached the lowest price this year on May 16 as Greeceâ€™s inconclusive May 6 election sparked political turmoil and reignited concern the country will renege on pledges to cut spending as required by the two separate rescue packages. In Spain, the cost of insuring against a default jumped to a record. Moodyâ€™s Investors Service lowered the credit ratings of 16 Spanish banks yesterday.
Silver for July delivery rose 1.4 percent to $28.405 an ounce. Palladium for June delivery was little changed at $605.15 an ounce. Platinum for July delivery gained 0.5 percent to $1,460.80 an ounce.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.