Gold surges on increasing safe-harbor demand

10:02, July 06, 2011      

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Gold futures on the COMEX Division of the New York Mercantile Exchange surged 2 percent on Tuesday, as mounting worries over Greece's debt crisis continued to underpin demand for the precious metal as a safe-haven. Silver and platinum both rallied.

The most active gold contract for August delivery jumped 30.1 dollars, or 2 percent, to 1,512.7 dollars per ounce.

Standard & Poor's Corp. said Monday a proposal to allow Greece more time to work out its fiscal problems would likely place the country in "selective default."

A report in the Financial Times on Tuesday noted the European Central Bank would continue to accept Greek government bonds as collateral for loans to banks as long as at least one ratings firm doesn't deem Greece to be in default.

Gold closed at lowest level since Mid-May last Friday, after Greece approved a package of austerity measures. A trader mentioned that the rating agency's warning reminded investors that the euro zone debt crisis is far from over and lingering concerns over the fiscal stability of debt-plagued Eurozone nations offered a strong boost to the demand for gold as a refuge.

Silver for September delivery jumped 1.705 dollars, or 5.1 percent, to 35.410 dollars per ounce. Platinum for October delivery climbed 25.3 dollars, or 1.5 percent, to 1,742.1 dollars per ounce.

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