Gold climbs sharply in a flight to safety

09:02, May 12, 2010      

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Gold futures on the COMEX Division of the New York Mercantile Exchange skyrocketed on Tuesday, hitting record settlement for the gold contract, as investors weighed the long-term effects of the nearly 1 trillion dollars loan package for debt-plagued eurozone countries. Silver surged by 4 percent, platinum also advanced.

The most active gold contract for June delivery surged 19.5 U.S. dollars, or 1.6 percent, to finish at 1,220.3 dollars, and once touched 1,233.1 dollars an ounce in the late globex session, surpassing the previous record of 1,227.50 dollar per ounce on Dec. 3 last year.

Although the monumental emergency bailout plain agreed by IMF and EU during weekend has eased investors' worries that Greece would face an immediate default and kept a lid on the skyrocketing borrowing costs in Portugal and Spain, many debt-laden eurozone countries still suffered from mounting pressures on their own fiscal health.

Euro gave back all its gains it made yesterday and resumed decline against the dollar on Tuesday, as investors re-examined the effectiveness of the huge bailout plan, and remained doubtful about some smaller eurozone nation' s ability to cut their deficit and reduce debt. The surging demand for bullion as an alternative to currencies boosted gold today.

The fear that the injection of vast amount of money to the eurozone economy may cause inflation also lifted gold, as gold usually serves as a good storage of value.

July silver surged 74.2 cents, or 4 percent, to settle at 19. 294 dollars per ounce. July platinum was up 7.3 dollars, to close at 1,700.8 dollars an ounce.



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