MW:Gold futures extend gains in electronic trading
By Sarah Turner, MarketWatch
SYDNEY (MarketWatch) — Gold futures advanced on Wednesday, extending sharp gains made the previous day in New York, with Europe’s debt troubles back on center stage.
Gold for August delivery GC1Q +0.22% rose $3.50 to $1,516.20 an ounce in electronic trading.
The precious metal jumped more than $30 an ounce in regular trading on Tuesday, buoyed by safe-haven buying as Europe’s debt issues came back onto the agenda.
On Monday, Standard & Poor’s credit-rating agency signaled that a plan to roll over Greek government debt would constitute a “selective default.” Then on Tuesday, Moody’s Investors Services downgraded Portugal’s credit rating by four notches to speculative grade. Read more on Portugal downgrade.
Julian Jessop at Capital Economics said that the price of gold is likely to be buffeted over the next few months, with worries about the heath of the global economy and sovereign debt supporting the precious metal, but fading inflation fears and a firmer dollar taking away its investment appeal.
Still, he expects upward pressures to win out and sees gold reaching $1,650 an ounce by the end of 2011 and $2,000 in 2012.
Commodities are priced in dollars and generally trade inversely to the U.S. currency. The dollar index DXY -0.13% , which measures the greenback against a basket of six other currencies, traded at 74.509 on Wednesday, from 74.661 in late North American trading on Tuesday.
September silver SI1U +0.93% rose 26 cents to $35.66 an ounce, while September copper HG1U -0.22% declined 1 cent to $4.34 per pound.
Sarah Turner is MarketWatch's bureau chief in Sydney.
