Gold Rises to Record


"People want to be in the currency of last resort."

Gold rose to a record for the second day in a row as financial turmoil in Europe spurred demand for an alternative to currencies.

Gold denominated in euros, pounds and francs also rallied to all-time highs on concern that a plan to rescue Europe's indebted nations will slow the region's economic recovery and devalue the 16-nation common currency. Holdings in the world's biggest ETF backed by the metal have advanced 5.2% this year to a record.

"Gold is expensive, but people in the eurozone are moving out of their currencies and forcing themselves into gold," said Adam Klopfenstein, a senior market strategist at Lind-Waldock. "There's a lot of fear on the part of the Europeans that moves to mitigate their debt crisis will only lead to more problems. People want to be in the currency of last resort."

Gold futures for June delivery rose $16.80, or 1.4 percent, to $1,237.10 an ounce at 11:44 a.m. on the Comex. Earlier, it touched $1,245.40—the highest ever. Gold for immediate delivery rose to a record $1,245.07 in London.

The euro is down 12% against the dollar this year as investors have lost confidence that Greece, Spain, Portugal and other nations that share the euro can contain their deficits. The EU and the IMF agreed to an almost $1 trillion rescue package over the weekend.

"The whole bailout package is quantitative easing across all of Europe," said Michael Guido, the director of hedge-fund sales at Macquarie Bank Ltd., who expects gold to rise to $1,500 by the end of the year. "You're seeing this big rush into gold ETFs, physical bar and coin demand out of Europe that's supporting the thesis that gold is the default currency."

Gold is up 13% this year, heading for its 10th consecutive annual gain.

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