By Polya Lesova & Myra P. Saefong, MarketWatch
FRANKFURT (MarketWatch) -- Gold futures surged above $1,239 an ounce on Wednesday, extending their sharp gains after ending at a record high in the previous session, as the safe-haven appeal of the precious metal continued to draw investors.
Gold for June delivery, the most active contract, hit an intraday high of $1,239.60 an ounce in electronic trading on Globex.
The contract was last up $17.90 to $1,238.20 an ounce.
Investors are currently weighing whether the European Union's 750 billion euro ($952 billion) plan will be enough to stop the Greek debt crisis from spreading to other nations in the euro zone, such as Spain and Portugal.
Gold is traditionally seen as a relatively safe asset that can keep its value, and investors tend to buy the metal at times of economic and financial turbulence.
"Persisting worries that the debt crisis in the euro zone could spill over to other countries despite the EU's 750 billion euro aid package and thus contribute to a destabilization of the financial system are driving investors to the yellow metal," wrote analysts at Commerzbank AG in Frankfurt.
On Tuesday, the June and May gold futures contracts rallied to finish at record closing levels. May gold is the front-month contract, but it's thinly traded. See Tuesday's gold column.
Safe-haven demand has been boosting gold prices, according to James Moore, analyst at TheBullionDesk.com.
"The sheer scale of fiscal deficits facing numerous countries is likely to prompt further diversification from fiat currencies and should ultimately propel gold to fresh highs," Moore wrote in a note.
Ed Bugos, director of mining finance at Strategic Metals Research & Capital, referred to gold as the "new reserve currency."
"Gold will pull back as the safe-haven premium shrinks -- on days when stock markets rally, for instance -- but the trend is up for the foreseeable future," he said.
