LONDON—The spot price of gold rose, shrugging off the stronger dollar that weighed on other metal markets, as fears of euro-zone debt contagion grew.
Ahead of the New York day, spot gold was $1,548.80 a troy ounce, up $4.60,, or 0.3%.
Speculation grew that Italy will be the next country hit as the euro debt crisis rolls forward, providing a lift for gold which is widely viewed by investors as a refuge asset in times of economic uncertainty. Italy's stock-market regulator, Consob, on Sunday introduced temporary measures aimed at curbing speculative attacks on the Milan stock market, after a wave of selling hit Italian bank stocks.
Morgan Stanley analyst Hussein Allidina said deepening fears over the more heavily indebted nations on the edge of the euro zone have "set a spark" under the gold market.
That came after Friday's weak U.S. jobs report spurred a jump in the yellow metal's price heading into the weekend.
Traders say the gain has now cemented bullish momentum in the market, which should be on track to target the June 22 high of $1,558 an ounce.
Credit Suisse on Monday said lifted its third-quarter forecast to $1,545 an ounce from $1,375 an ounce, and its fourth-quarter forecast to $1,560 an ounce, also from $1,375 an ounce. The bank also raised its longer-term expectations, with its 2012 average estimate rising up to $1,550 an ounce from $1,350 an ounce, and 2013 estimate up at $1,475 an ounce from $1,325 an ounce.
The bank said that in addition to fears over a spreading of the sovereign debt crisis, it expects growing inflation concerns to be a key driver for the market. Gold is viewed as a store of value and is often purchased as a hedge against inflation.
"Although the U.S. has indicated it will not administer another round of stimulus, we continue to expect inflation concerns will grow as it becomes more apparent that central banks are unwilling to raise rates due to the negative effects it will have of on growth rates and stubbornly high unemployment," the bank said.
It also predicts further demand for gold as an inflation hedge from emerging markets, particularly India and China.
The bank also said it expects silver to hold above $30 an ounce for the next six to 12 months, lifted by stronger industrial demand, support from exchange-traded products, cost inflation in silver-producing countries and financial diversification into precious metals.
Monday, spot silver was down 18 cents, or 0.5%, at $36.53 an ounce. Spot platinum was down $6, or 0.3%, at $1,729 an ounce, and spot palladium had fallen $10, or 1.3%, to $765 an ounce.
Write to Rhiannon Hoyle at rhiannon.hoyle@dowjones.com
