Gold rises to a record last month on the escalating European debt crisis and a US dollar that’s dropped 6,6% against the major currencies this year MARIA KOLESNIKOVA and PHAM-DUY NGUYEN Published: 2011/06/07 07:24:57 AM GOLD futures rose to a five-week high yesterday on speculation that borrowing costs in the US will remain low after economic data signalled the recovery may be faltering, hurting the dollar and boosting the appeal of precious metals. US payrolls grew at the slowest pace in eight months last month, and the unemployment rate unexpectedly climbed to 9,1% from 9% in April, government figures released last Friday show. The data followed statistics suggesting the economy is decelerating. Gold rose to a record last month as the European debt crisis escalated. Before yesterday, the dollar had dropped 6,6% against a basket of major currencies this year. "Precious metals prices remain supported by disappointing US macro data, the weaker dollar and the probability of a second major Greek bail-out," Morgan Stanley analysts said . "The prevalence of global macroeconomic uncertainty will push the complex to test recent highs." Gold futures for August delivery rose $0,102, or 0,7%, to $1552,60/oz yesterday morning on the Comex in New York. Earlier, the price reached $1555, the highest for a most-active contract since May 2, when the metal reached a record $1577,40. The Federal Reserve has kept its benchmark interest rate at 0% to 0,25% since December 2008 and has pledged to acquire $600bn in Treasuries through to the end of this month to help revive the economy. "There’s a sense in the market that excessive regulations, economic uncertainty, and high gasoline prices will continue to lead to economic weakness," said Tom Pawlicki, an analyst at MF Global Holdings in Chicago. "These should all be good for precious metals." Silver futures for July delivery rose $0,944, or 2,6%, to $37,135/oz. The price tumbled 4,4% last week. Gold hit its rand peak on May 25 when the JSE’s NewGold exchange traded fund closed at R104,95. Yesterday, NewGold gained 1,14% to close at R101,65. Each NewGold debenture represents one-hundredth of an ounce of gold. NewGold’s manager, Absa Capital, said yesterday it had issued an additional 800000 debentures following subscriptions for about 7791oz of gold bullion at an issue price of R102 a debenture, which were listed from commencement of business yesterday. NewGold debentures in issue after the issue of the additional debentures will be 158436300, referencing 1543018 ounces of gold bullion. With market capitalisation of R16bn, NewGold is more than double the size of the JSE’s second-biggest exchange traded fund, Satrix 40 , whose market cap is R6,6bn. Bloomberg, Staff Writer

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