By Claudia Assis and V. Phani Kumar, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold prices traded at a record Tuesday, slicing through the $1,750-an-ounce milestone as a massive sell-off in global equity markets drew safety-seeking investors to the metal.
Gold futures for delivery in December added $24.50, or 1.5%, to $1,738.90 an ounce on the Comex division of the New York Mercantile Exchange.
The contract traded as high as $1,782.50 an ounce earlier. Gold has gained more than 20% so far this year, including a gain of 5% this week.
“The U.S. credit downgrade, coming so close on the heels of the debt-ceiling crisis, has left investors searching for a safe haven and choosing gold,” HSBC analyst James Steel wrote in a report, referring to Standard & Poor’s decision to downgrade U.S. debt late last week to AA+ from AAA.
“There may also be an element of concern among investors that the [Federal Reserve] may monetize the debt. The inflationary consequences of such action are supportive of gold. Even if this is not policy, the fear among some investors that this might occur should keep gold well bid,” he said.
The U.S. Federal Open Market Committee is scheduled to meet Tuesday to decide on its monetary policy, amid a debate over whether weakening economic indicators will force its hand in launching a fresh round of monetary easing.
The day’s surge in gold prices have come as most other asset classes got pummeled on mounting worries about U.S. and euro-zone sovereign-debt issues.
The broader suite of metals futures tracked gold higher, with silver the lone exception. September silver declined $1.59, or 4%, to $37.85 an ounce.
Copper for September delivery added 4 cents, or 1.1%, to trade at $4 a pound.
Claudia Assis is a San Francisco-based reporter for MarketWatch. Varahabhotla Phani Kumar is a reporter in MarketWatch's Hong Kong bureau.
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