Gold stays firm as safety bids amid Eurozone turmoil, weaker dollar

08:23, December 02, 2010      

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Gold futures on the COMEX Division of the New York Mercantile Exchange extended winning streak to third session on Wednesday, as investors continued to purchase gold as a hedge against widening Europe debt woes and inflationary pressures in Asia. A weaker U.S. dollar also helped push up the gold prices. Silver and platinum both advanced.

The most active gold contract for February delivery added 2.2 dollars, or 0.2 percent, to 1,388.3 dollars per ounce. Earlier the prices reached 1,398.30 dollars per ounce in electronic trading overnight, the highest point since Nov. 12.

The dollar index, a gauge comparing the U.S. unit to a basket of six currencies, dipped 0.2 percent to 81.05 on Wednesday. A weaker dollar is considered quite supportive for gold, as it makes dollar-denominated bullion cheaper to holders of other currencies.

Traders noted that the safe-haven demand remained stable on Wednesday, as the bailout of the Irish Banks failed to convince investors that the debt crisis will not spread. The cost of insuring Portuguese, Spanish and Italian bonds surged to records, and gold priced in euros hit an all-time high.

Meanwhile, the upbeat economic data of China and Germany also offered a strong boost to gold earlier in the session. A report showed that China's measures of manufacturing activity rose in November, increasing expectations of rising inflationary pressure.

Traders noted that other exciting macroeconomic data such as U. S. third-quarter productivity growth was revised up, November private-sector employment in U.S. jumped the most in three years, and Britain's manufacturing jumped to a 16-year high have all contributed to erode gold's safe-haven appeal later in the session. A strong rally in global equity markets also added downward pressure on gold.

Silver futures for March delivery climbed 20.1 cents, or 0.7 percent, to 28.413 dollars per ounce. January platinum rose 17.6 dollars, or 1.1 percent, to 1,684 dollars per ounce.

Source: Xinhua


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