Gold hits seven-week highs as safe-haven demand returns

08:55, August 20, 2010      

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Gold futures on the COMEX Division of the New York Mercantile Exchange ended moderately higher on Thursday, paring earlier gains after reaching 7-week high, as a bout of downbeat U.S. economic data once again raised investors' worries over the sluggish economic recovery and sparked safe-haven demand for the precious metal. Silver and platinum both extended losses.

The most active gold contract for December delivery rose 4.0 U. S. dollars, or 0.3 percent, to finish at 1,235.4 dollars per ounce, the price once touched 1,239.5 dollars per ounce, which is the highest level for the most-active contract since July 1.

Gold surged early Thursday after data showed that last week's first-time claims for jobless benefits unexpectedly jumped to a nine-month high of a seasonally adjusted 500,000, while regional factory activity unexpectedly contracted in August to the lowest level since July 2009.

Although silver and platinum group metal softened on investors' rekindled concerns that the U.S. economic recovery has stalled, gold managed to rise on a flight to quality as well as softening dollar, but the deep slide in U.S. equity markets gradually took steam out of gold's rally, as investors had to sell gold in order to raise cash and meet the marginal calls in the stocks markets.

The bullion prices accelerated losses as dollar reversed losses and held its ground in the late session, but gold managed to stay higher as investors believe that the precious metal retain value better than other commodities.

September silver lost 7.2 cents, or 0.4 percent, to settle at 18.327 dollars per ounce. October platinum dipped 9 dollars, or 0. 6 percent, to 1,527.5 dollars per ounce.



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