By Claudia Assis and Myra P. Saefong, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures rose 2% Tuesday as U.S. consumers turned more pessimistic about the economy and uncertainty ahead of the European Union summit created havoc with most other assets.
Gold for December delivery GC1Z +2.25% gained $33.40 to $1,685.70 an ounce on the Comex division of the New York Mercantile Exchange.
The metal regained at least some of its safe-haven appeal on news euro-zone finance ministers won’t meet Wednesday, even though their top leaders will.
“Gold has edged higher ... as concerns about the European debt crisis and the risk of contagion are leading to demand for gold for wealth-preservation purposes,” said analysts at GoldCore in a note Tuesday.
A meeting of European Union finance ministers that had been set to take place ahead of Wednesday’s much-anticipated summit of European leaders in Brussels has been canceled, news reports said. The leaders’ summit, however, is set to continue.
The cancellation raised doubts among some investors about the ability of EU leaders to conclude a broad plan to address the euro-zone debt crisis, amid talk of ongoing disagreements over how to leverage the region’s bailout fund, impose larger write-downs on the private sector’s Greek bond holdings, and recapitalize the region’s banks.
“The likelihood of the euro zone sorting out their intractable problems has come into question again as ... Europe’s largest banks have clashed with politicians about the size of losses they will have to take on their Greek debt,” GoldCore analysts said.
Looking further ahead, “the euro-zone project must either jump to default or devaluation,” said Adrian Ash, head of research at BullionVault.com. “That can only bring gold to the fore for investors everywhere.”
Meanwhile, some downbeat U.S. economic data also helped fuel gold’s gains, and kept prices mixed for metals more closely linked with industrial uses lower.
U.S. consumer confidence dropped to the lowest level since March 2009, the Conference Board reported. The index declined to 39.8 in October from 46.4 a month earlier. Read more about consumer confidence.
“The consumer confidence numbers were very soft today and this is weighing on equities and supporting Treasurys,” said Charles Nedoss, senior market strategist with Olympus Futures in Chicago.
In other metals trading Tuesday, copper pulled back after sizable gains in the past two sessions. December copper HG1Z -1.04% shed 4 cents, or 1.2%, to $3.41 a pound. The metal gained 7% the previous day. Read more about copper's Monday rally.
Silver for December delivery SI1Z +2.14% rose 64 cents, or 2%, to $32.26 an ounce, while January platinum PL2F +1.17% was up $16.70 at $1,558.70 an ounce. December palladium PA1Z +0.67% rose $1.50 to $640 an ounce.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
Myra Saefong is a MarketWatch reporter based in San Francisco.
