Gold futures climb to six-week high

Gold has hit a six week high as investors flock to the metal and other commodities as safe-havens against the uncertainty surrounding the euro zone as well as news on other US economic data.

Nov. 3, 2011, 2:22 p.m. EDT
By Claudia Assis and Myra P. Saefong
Market Watch

SAN FRANCISCO (MarketWatch) — Gold futures rallied to a six-week high Thursday as the metal ran higher with other commodities and also got some safe-haven flow from mixed U.S. economic data and uncertainty surrounding the euro zone.

Gold for December delivery GC1Z +2.18% gained $35.50, or 2.1%, to settle at $1,765.10 an ounce on the Comex division of the New York Mercantile Exchange. That was gold’s highest settlement since Sept. 21.

The political troubles of Greece’s Prime Minister George Papandreou mounted on Thursday after Greece’s finance minister publicly opposed a plan to tie a referendum to the nation’s membership in the euro zone.

Papandreou has called off the referendum, according to news reports.

The premier’s bombshell announcement on Monday calling for a popular vote on the latest bailout and austerity deal with the European Union has caused turbulence in global financial markets. Read more about disagreement over the referendum

For gold, a move back to the $1,800 level “seems likely — possibly in November,” analysts at GoldCore said in a note Thursday.

They cited “the scale of the European and global debt crisis, the slowing U.S. and global economy and heightened macroeconomic, monetary and systemic risk” as factors behind any upside gains for the precious metal.

Meanwhile, in a surprise move Thursday, the European Central Bank cut its key lending rate by a quarter of a percentage point, to 1.25%, while tying the move to an effort to stave off a full-blown recession in the region. Read about the ECB decision

On Wednesday, the Federal Open Market Committee left its key U.S. interest rate pegged at a historic low range of 0% to 0.25% where it has been since December 2008. Read more about the Fed decision

Also Wednesday, the Fed cut its growth outlook sharply for this year, 2012 and 2013, and Chairman Ben Bernanke said at a press conference that the Fed intends to hold rates close to zero until “at least” mid-2013 and was prepared to do more to bolster growth in the largest global economy. Read more about the growth outlook Read more on Bernanke’s statement

“The story here is that gold has regained its safe-haven status, yet is also responding quite positively to any indications of further monetary easing,” said Brien Lundin in his latest Gold Newsletter. “In particular, bulls looking for some straws in the wind were cheered by the dissent of committee member Charles Evans of the Chicago Fed, a monetary dove who was apparently pushing for more easing.”

In U.S. economic news Thursday, new applications for jobless benefits fell a bit more than expected, by 9,000 last week to 397,000, the Labor Department reported. Separately, the Commerce Department said factory orders edged up 0.3% to $453.5 billion in September.

But the Institute for Supply Management reported that activity in the service sectors of the U.S. economy expanded at a slightly slower pace in October, with the ISM non-manufacturing index inching lower, to 52.9% from 53.0% in September.

Silver futures for December delivery SI1Z +1.91% added 55 cents, or 1.6%, to settle at $34.50 an ounce on Comex, extending a 3.7% advance in the previous session.

January platinum PL2F +2.68% gained $45.70, or 2.9%, to $1,647 an ounce, while December palladium PA1Z +1.33% put on $13.45, or 2.1%, to $662.10 an ounce.

December copper HG1Z +0.20% turned higher, ending the day up 1 cent, or 0.2%, to $3.59 a pound.

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