Gold closed higher today for its sixth session in a row. There may be a pause in the rally if Greece comes to a resolution to solve their financial problems, but it will continue its climb higher once again. There is still a lot of uncertainty in global markets giving investors "a million reasons to be long in gold."
By Myra P. Saefong and Claudia Assis
June 21, 2011, 2:32 p.m. EDT
SAN FRANCISCO (MarketWatch) — Gold futures closed higher Tuesday, as lingering concerns about Greece’s sovereign-debt crisis and its potential impact on the global economy helped lift prices for the precious metal for a sixth session in a row.
Gold for August delivery GC1Q +0.37% added $4.40, or 0.3%, to close at $1,546.40 an ounce on the Comex division of the New York Mercantile Exchange. The contract has now tallied a gain of $30.80 in the past six sessions.
The gold market may see a “pause in the rally if there’s a resolution to the Greek crisis because the fear of an implosion will be put off into the future,” said Frank Lesh, broker and futures analyst with Future Path Trading in Chicago.
But gold prices will head higher again. “We will just have to wait for more troubles to support the gold prices,” he said.
The government of Prime Minister George Papandreou faces a crucial confidence vote in Greek Parliament around 5 p.m. Eastern time.
His government is considered likely to survive the vote, securing political support to push through unpopular spending cuts later this month in order for Greece to receive the next installment of international aid and avoid a default. Read more about Greece.
Right now, the weaker dollar and strong euro are among the reasons gold is higher, said Lesh. “There is still a lot of uncertainty in major world economies — the U.S., Europe and even China. There’s a million reasons to be long in gold.”
Many analysts don’t expect to see significant declines in gold any time soon.
“At the moment, the biggest downside risk to gold would be a strong dollar rebound and easing euro-zone peripheral debt jitters, though the chances of both events happening simultaneously are still very small in the short run,” Andrey Kryuchenkov, an analyst at VTB Capital, said in a research note.
Investors are also monitoring the Federal Reserve’s two-day meeting on the U.S. economy, monetary policy and interest rates scheduled to wrap up on Wednesday.
Silver finished higher on Tuesday, with the July contract SI1N +0.82% adding 31 cents, or 0.9%, to end at $36.38 an ounce.
July copper HG1N +0.28% was also up 2 cents, or 0.4%, to finish at $4.09 a pound. July platinum PL1N +1.17% tacked on $16.70, or 1%, to $1,747.20 an ounce and September palladium PA1U +2.83% ended at $767.25 an ounce, up $19.05, or 2.6%.
Myra Saefong is a MarketWatch reporter based in San Francisco. Claudia Assis is a San Francisco-based reporter for MarketWatch. Sara Sjolin in New York contributed to this report.
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