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Gold hovers below record; Europe woes, U.S. debt talk aid - ASHARQ AL-AWSAT English Archive
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NEW YORK, (Reuters) – Gold hit a second consecutive record high on Thursday as mounting concerns over a worsening euro zone debt crisis and fears of U.S. default powered the metal’s longest winning streak in five years.

Bullion notched a ninth straight day of gains, the longest since October 2006, and one shy of its best streak in over four decades. The precious metal has risen more than 7 percent since its winning streak began.

Analysts forecast gold would extend its rally further, with one saying it could reach $2,000 an ounce. A Reuters poll showed gold prices should average $1,550 an ounce in 2012.

Gold pared gains after hitting a record near $1,600 as the dollar reversed losses after Federal Reserve Chairman Ben Bernanke crushed speculation that another round of monetary easing was on the way.

“The dollar, which is so oversold … went through a reversal against every currency, and gold is caught up with that,” said James Dailey, portfolio manager of the TEAM Asset Strategy Fund, which oversees $200 million in assets.

Spot gold touched a record $1,594.16, and was up 0.3 percent at $1,586.11 an ounce by 3:05 p.m. EDT (8:05 p.m. British time).

U.S. gold futures for August delivery settled up $3.80 an ounce at $1,589.30, after trading between $1,579.40 and $1,594.90.

U.S. futures trading volume topped 200,000 lots for a second day, in line with its 30-day average and one of the busiest days since May, as investors switched their focus back to gold from equities.

Tom Fitzpatrick, chief technical strategist at CitiFX, said gold could rise to a record between $1,700 and $1,750 in the next two to three months based on momentum and past rallies.

The metal’s next technical resistance comes at $1,660, near a channel top dating from its rally that started in August 2010.

The metal was underpinned by safe-haven demand as euro zone countries grappled with the issue of involving the private sector in tackling Greece’s debt pile. Investors fear the crisis could hit Italy, one of the region’s largest economies.

Gold was weakened with commodities and other risk assets after Bernanke reiterated that the Fed would be ready to inject more money into the system should the U.S. economy worsen, but said the time had not come yet.

The metal may surge to $2,000 if the Fed starts a third round of U.S. debt purchases, Michael Pento, a senior economist at Euro Pacific Capital Inc, said. “People will be forced into buying gold,” Pento said.

NO SIGNS OF U.S. DEBT DEAL

Also underpinning gold is mounting uncertainty over a deal to raise the U.S. debt ceiling to preserve low borrowing costs for the world’s largest economy.

U.S. President Barack Obama and top Republicans faced growing pressure at home and from the United States’ biggest foreign creditor, China, on Thursday to stop deficit talks from spiraling out of control and sending shockwaves through the global financial system.

The dollar’s reserve-currency status would be severely undermined and that would boost gold if the country defaults on August 2, the U.S. imposed deadline to raise the debt limit.

Looking forward, a poll of 15 analysts conducted by Reuters in the past two weeks has returned a median forecast that gold prices will average $1,550 an ounce in 2012.

Silver rose 0.8 percent to $38.55 an ounce, building on the previous session’s near 6 percent rise, its best one-day performance in over two months.

The gold:silver ratio — the number of silver ounces needed to buy an ounce of gold — eased to its lowest since late May at around 40.

Among platinum group metals, spot platinum rose 0.7 percent to $1,763.74 an ounce, while spot palladium rose 0.1 percent to $773.25 an ounce.

NEW YORK, (Reuters) – Gold hit a second consecutive record high on Thursday as mounting concerns over a worsening euro zone debt crisis and fears of U.S. default powered the metal’s longest winning streak in five years.

Bullion notched a ninth straight day of gains, the longest since October 2006, and one shy of its best streak in over four decades. The precious metal has risen more than 7 percent since its winning streak began.

Analysts forecast gold would extend its rally further, with one saying it could reach $2,000 an ounce. A Reuters poll showed gold prices should average $1,550 an ounce in 2012.

Gold pared gains after hitting a record near $1,600 as the dollar reversed losses after Federal Reserve Chairman Ben Bernanke crushed speculation that another round of monetary easing was on the way.

“The dollar, which is so oversold … went through a reversal against every currency, and gold is caught up with that,” said James Dailey, portfolio manager of the TEAM Asset Strategy Fund, which oversees $200 million in assets.

Spot gold touched a record $1,594.16, and was up 0.3 percent at $1,586.11 an ounce by 3:05 p.m. EDT (8:05 p.m. British time).

U.S. gold futures for August delivery settled up $3.80 an ounce at $1,589.30, after trading between $1,579.40 and $1,594.90.

U.S. futures trading volume topped 200,000 lots for a second day, in line with its 30-day average and one of the busiest days since May, as investors switched their focus back to gold from equities.

Tom Fitzpatrick, chief technical strategist at CitiFX, said gold could rise to a record between $1,700 and $1,750 in the next two to three months based on momentum and past rallies.

The metal’s next technical resistance comes at $1,660, near a channel top dating from its rally that started in August 2010.

The metal was underpinned by safe-haven demand as euro zone countries grappled with the issue of involving the private sector in tackling Greece’s debt pile. Investors fear the crisis could hit Italy, one of the region’s largest economies.

Gold was weakened with commodities and other risk assets after Bernanke reiterated that the Fed would be ready to inject more money into the system should the U.S. economy worsen, but said the time had not come yet.

The metal may surge to $2,000 if the Fed starts a third round of U.S. debt purchases, Michael Pento, a senior economist at Euro Pacific Capital Inc, said. “People will be forced into buying gold,” Pento said.

NO SIGNS OF U.S. DEBT DEAL

Also underpinning gold is mounting uncertainty over a deal to raise the U.S. debt ceiling to preserve low borrowing costs for the world’s largest economy.

U.S. President Barack Obama and top Republicans faced growing pressure at home and from the United States’ biggest foreign creditor, China, on Thursday to stop deficit talks from spiraling out of control and sending shockwaves through the global financial system.

The dollar’s reserve-currency status would be severely undermined and that would boost gold if the country defaults on August 2, the U.S. imposed deadline to raise the debt limit.

Looking forward, a poll of 15 analysts conducted by Reuters in the past two weeks has returned a median forecast that gold prices will average $1,550 an ounce in 2012.

Silver rose 0.8 percent to $38.55 an ounce, building on the previous session’s near 6 percent rise, its best one-day performance in over two months.

The gold:silver ratio — the number of silver ounces needed to buy an ounce of gold — eased to its lowest since late May at around 40.

Among platinum group metals, spot platinum rose 0.7 percent to $1,763.74 an ounce, while spot palladium rose 0.1 percent to $773.25 an ounce.

Asharq Al-Awsat

Asharq Al-Awsat

Asharq Al-Awsat is the world’s premier pan-Arab daily newspaper, printed simultaneously each day on four continents in 14 cities. Launched in London in 1978, Asharq Al-Awsat has established itself as the decisive publication on pan-Arab and international affairs, offering its readers in-depth analysis and exclusive editorials, as well as the most comprehensive coverage of the entire Arab world.

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