Gold Prices Climb on Portugal Downgrade
Source: The Street, Chao Deng (7/6/11)
"A raise in interest rates by China's central bank did little to drag down gold futures."
Gold prices edged up after Portugal's credit downgrade revived fears of a eurozone debt contagion.
Gold for August delivery was gaining $14.80 to $1,527 an ounce at the Comex division of the New York Mercantile Exchange. The yellow metal traded as high as $1,529 and as low as $1,510 while the spot gold price was gaining $10.60 to $1,527 an ounce, according to Kitco's gold index.
Yesterday, rating agency Moody's Investors downgraded Portugal's credit rating to junk status. Gold was already surging upward early Tuesday after struggling to gain momentum last week.
A weakening euro was helping to push gold higher, with the euro losing 0.8% against the greenback. The dollar index edged up by 0.5% to $75.02 against a basket of currencies.
Increasing U.S. fiscal worries have also led investors to flee to safe-haven assets. President Obama announced yesterday that while legislators have made progress on raising the debt ceiling, further work is needed before the parties can clinch a deal.
China's local government might be higher than expected at $450 billion, according to Moody's on Tuesday. That news spurred some concern that China's credit rating could be downgraded. A raise in interest rates by China's central bank to cool inflation did little to drag down gold futures.