Precious Metals: Gold Tops $1,600 an Ounce as Debt Fears Simmer - Gol...

http://www.cnbc.com/id/43788734/print/1/displaymode/1098/

Gold Tops $1,600 an Ounce as Debt Fears Simmer

U.S. SILVER FUTURES, G OLD PRIC ES, PREC IOUS METALS, SILVER, SPOT SILVER, METALS, C OM MODITIES, EURO ZONE DEBT C RISIS, ITALY, U.S. DEBT C EILING, U.S. PAYROLLS DATA, ITALY, Reuters| 18 Jul 2011 | 10:47 AM ET

Gold prices rallied to record highs above $1,600 an ounce in Europe on Monday as investors spooked by the euro zone debt crisis and the threat of a U.S. default bought into the metal as a haven from risk. Risk aversion swept the markets after euro zone stress test results failed to address the potential for a Greek sovereign debt default before a summit in Brussels on Thursday, and as a deadline to raise the $14.3 trillion U.S. debt ceiling loomed. Stock markets, peripheral euro zone debt, oil prices and the euro came under pressure, while the Swiss franc often seen as a safe havenand precious metals climbed. Spot gold rose as high as $1,602.86 an ounce and was up 0.4 percent at $1,600.26 an ounce. Gold rose more than 3 percent for a second straight week to Friday, a feat it has not achieved since February 2009. "Gold has room to go up. The smouldering debt crisis in the euro zone peripheral countries and the uncertainty over the debt limit in the United States are currently supporting prices," said Commerzbank analyst Daniel Briesemann. "It seems gold will stay well supported unless we get a real and convincing solution from the extraordinary EU summit that takes place on Thursday." European shares fell sharply as long-awaited bank stress test results only intensified worries about the regional debt crisis, while U.S. stock index futures slumped. Sovereign default fears are growing in both Europe and the United States. The United States is struggling with deficit reduction talks ahead of the White House's July 22 deadline on a deal to raise the $14.3 trillion debt ceiling. Gold prices backed off from the $1,600 an ounce level only briefly after U.S. Treasury Secretary Tim Geithner expressed confidence that Congress would raise the debt ceiling and said Republicans had taken "default off the table." On the foreign exchange markets, the euro slid 0.5 percent against the dollar. Gold rallied across a number of major currencies, also hitting record highs in euro, sterling, South African rand and Canadian dollar terms. But while it has risen 12.5 percent in dollar terms this year and 7.2 percent in euros, gold has fallen 1.4 percent when priced in Swiss francs. "Investors are increasingly looking to gold as a safe haven as the U.S. dollar, pound sterling and the euro continue to devalue against stronger currencies such as those of Canada, Australia, Norway and Switzerland," said chief executive of Sector Investment Managers. Other precious metals tracked gold higher, with silver rising above $40 an ounce for the first time since early May. The grey metal rallied to a record $49.51 an ounce in April before correcting sharply. It has rallied more than 15 percent in the last two weeks, however, as gold prices have risen. Silver peaked at $40.44 an ounce and was later bid at $40.37 an ounce against $39.27. Spot platinum was bid at $1,766.24 an ounce versus $1,748, while spot palladium was at $788.22 an ounce against $771. Copyright 2011 Thomson Reuters. Click for restrictions.

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7/18/2011 7:55 AM