Gold holds up in flight to safety

09:03, June 02, 2010      

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Gold futures on the COMEX Division of the New York Mercantile Exchange ended much higher on Tuesday, as geopolitical turmoil in the middle-east and plunging euro spurred fresh demand for the bullion. Silver climbed and platinum remained unchanged.

The most active gold contract for August delivery surged 11.9 dollars, or 1.0 percent, to finish at 1,226.9 dollars, the price once hit 1,230.6 dollars per ounce.

The European Central Bank warned late Monday that Eurozone banks will suffer "considerable" loan losses in 2010 and 2011. Euro sank to the lowest points against U.S. dollar since April 2006 on Tuesday, as investors remained cautious to stay away from risky assets and prefer tangible assets like gold amid persistent jitters over the region' s fiscal health. Gold climbed as an alternative to currencies.

Meanwhile, the mounting tensions in the middle-east heightened by Israel's attack on the flotilla of aid relief ships, which broke a blockade to bring supplies to Gaza also supported gold, as investors who worried that tensions may further escalate sought to shift to gold, which is one of the few investments that can survive and thrive during stressful times of geopolitical strife.

July silver was up 12.9 cents, or 0.7 percent, to settle at 18. 551 dollars per ounce.



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