SF: Gold Futures Fluctuate as Investors Seek Currency Alternative
April 26 (Bloomberg) -- Gold futures fluctuated after climbing to a one-week high in New York as some investors sought an alternative to currencies.
The euro fell as much as 0.7 percent against the dollar as the cost of insuring Greek government debt against default reached a record. Gold priced in euros and Swiss francs climbed to records.
"There's still a lot of concern about the value of the euro and that moves a lot of money into gold," said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. "In the U.S., a stronger dollar still brings in sellers."
Gold futures for June delivery rose $2.60, or 0.2 percent, to $1,156.30 an ounce at 10:15 a.m. on the Comex in New York. Earlier, the price touched $1,160.70, the highest level since April 16, before falling as low as $1,152.30.
Concern that Greece's mounting debt may erode the value of the euro has dragged the 16-nation currency down 7 percent against the dollar this year. Investors are also selling euros and buying gold on speculation that other European countries may need a bailout.
"The risk of a serious and contagious sovereign-debt crisis is increasing and understandably this is leading to safe- haven demand for gold," Dublin-based brokerage GoldCore Ltd. said today in an e-mailed report. "A Western European country has not defaulted on its debt since World War II, so the implications of such a default are momentous."
Gold generally climbs when the dollar falls. Last year, the metal rallied 24 percent when the dollar fell 4.2 percent against a basket of six major currencies, including the euro.
'Seeking Safety'
"The perception now is that the U.S. is better, even though we've some debt problems of our own," said Lesh of FuturePath. "Gold is just one of the places where Europe is seeking safety. Investors are also buying U.S. Treasuries and equities."
In other New York markets, silver for July delivery rose 18.7 cents, or 1 percent, to $18.41 an ounce on the Comex. Platinum futures for July delivery gained $11.80, or 0.7 percent, to $1,753.50 an ounce, and palladium futures for June delivery climbed $8.80, or 1.6 percent, to $572 an ounce.
The outlook for precious metals is "moderately positive," Credit Suisse Group AG said today in a report. "While we think that platinum should continue to benefit from rising industrial production, we expect gold and silver prices to climb only slightly," said Eliane Tanner, a commodity analyst.
