Eurozone crisis intensifies as S&P cuts Italy’s credit rating
By Myra P. Saefong, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures climbed Tuesday to recoup the $1,800-an-ounce level as Standard & Poor’s Ratings Services’ downgrade to Italy’s credit rating helped buoy investment demand for the precious metal.
Gold for December delivery GC1Z +1.33% rose $23.70, or 1.3%, to $1,802.60 an ounce on the Comex division of the New York Mercantile Exchange.
The contract had fallen $35.80, or 2%, on Monday to finish at its lowest level in more than three weeks as a stronger U.S. dollar pressured commodity prices.
But late Monday, S&P cut Italy’s long-term credit rating to A from A-plus, and cut its short-term rating to A-1 from A-1-plus, citing a weak economic outlook and ongoing political gridlock. Read more about S&P’s Italy rating cut.
The rating cut “doused cold water over Italy’s capacity to address their public finances,” analysts at GoldCore said in a note to clients Tuesday.
“As long as governments cower from their responsibilities to balance their budgets and continue to print money instead of paying their bills, gold will likely appreciate in paper money terms,” they said.
Other metals traded higher Tuesday, with copper the exception.
The December copper contract HG1Z -0.45% was down 2 cents, or 0.6%, at $3.76 a pound, extending declines after dropping 3.8% on Monday.
December silver SI1Z +1.72% was up 67 cents, or 1.7%, at $39.84 an ounce following a 4% decline a day earlier. October platinum PL1V +0.53% also added $45.10, or 0.3%, to $1,777.40 an ounce and palladium for December delivery PA1Z +0.67% tacked on $4.30, or 0.6%, to $716.40 an ounce.
Metals traders also awaited the outcome of the two-day meeting of the Federal Open Market Committee, which ends with a statement Wednesday.
The Federal Reserve is expected to announce a plan on Wednesday to swap shorter-maturity government securities for longer-dated ones in another stab at jolting the slow-moving U.S. economy, analysts said on the eve of a key meeting. Read the Fed preview story.
Overall, “the longer-term outlook for gold still remains bullish due to the increasing diversification towards safe-havens, and the prospect of further inflation/debasement on the dollar should further stimulus be seen,” James Moore, an analyst at TheBullionDesk.com, said in a daily note.
Myra Saefong is a MarketWatch reporter based in San Francisco.
