Gold extends rally as S&P downgrades U.S. credit outlook

11:14, April 19, 2011      

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Gold futures on the COMEX Division of the New York Mercantile Exchange further hiked on Monday, sending the precious metal's all-time closing record to 1, 492.9 dollars per ounce, after Standard & Poor's (S&P) revised the U.S. credit outlook to negative.

The most active gold contract for June delivery increased 6.9 U. S. dollars, or 0.46 percent, to 1,492.9 dollars per ounce.

S&P on Monday cut its long-term rating of the U.S. credit outlook to "negative" from "stable," citing the "material risk" that U.S. policymakers won't reach an accord on "medium- and long- term budgetary challenges."

Market analysts said that the downgrade has boosted gold's appeal as a safe-haven investment. Besides, the ongoing debt crisis in Europe as well as the inflationary concerns continued to buoy up the precious metal.

Gold hit its last record high on April 15, as Moody's Investors Service downgraded Ireland's government debt by two notches. Meanwhile, the U.S. consumer price index rose 0.5 percent year on year in March, and China's inflation advanced by 5.4 percent.

Mike Daley, a senior gold analyst with PFGBest, said that Monday's price hike happened in the face of lower crude oil prices and another tightening measure from China, which showed that global investors were more concerned about inflation and the debt crisis.

Besides, some investors moved funds from other investments that suffered big losses, which also helped underpin the gold market. U. S. equities on Monday headed for the biggest drop in a month.

In the past four weeks, gold climbed almost five percent and silver 21 percent.

May silver surged 38.5 cents, or 0.9 percent, to 42.956 dollars per ounce, the highest level in 31 years. July platinum declined 12 dollars, or 0.67 percent, to 1,782.8 dollars per ounce.

Source: Xinhua
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