Safe-haven flows send futures to new record at $1,872 an ounce
By Sarah Turner and William L. Watts, MarketWatch
FRANKFURT (MarketWatch) — Gold futures surged to another record Friday, as global equities continued to slide amid investor fears about global growth prospects and the health of the European banking sector.
Gold for December delivery GC1Z +2.46% advanced $43 to $1,865 an ounce in electronic trading on Friday, after hitting a record high at $1,872, according to FactSet Research data.
In regular trading hours on Thursday, the precious metal added $28.20, or 1.6%, to end at $1,822 an ounce. Gold traded as high as $1,829.70 an ounce.
Investors fled to the perceived safety of gold after a downbeat reading on factory activity in the Philadelphia region and as Europe’s banks saw heavy losses on Thursday.
Europe’s banks may see more pressure on Friday.
“News that the New York Federal Reserve lent the Swiss National Bank $200 million via its U.S. dollar swap lines in the week ending 17 August has done little to quell concerns over the European financial sector,” said strategists at RBC Capital Markets.
They noted that the lines have not been tapped since March, when the European Central Bank used the facility.
Even news that Venezuela intends to nationalize its gold industry and repatriate its overseas gold reserves is unlikely to dent gold’s appeal, said strategists at Capital Economics.
“Venezuela is running desperately low on dollars, suggesting that the repatriation of the gold reserves would be a precursor to their sale,” they said.
However, “we suspect that Venezuela would find some very willing buyers elsewhere given the continuing high demand for gold as a safe haven,” the strategists added.
Strategists at Barclays Capital added: “A developed world with slower growth, a large fiscal deficit and near zero rates over the next few years, inflationary pressures in emerging economies, and larger political and economic uncertainty bodes well for history’s oldest form of wealth.”
Sarah Turner is MarketWatch's bureau chief in Sydney.
