Gold climbed above $1,700 an ounce for the first time after Standard & Poor’s cut the top U.S. credit rating, fueling a slump in equities and the dollar amid concern that the global economy is slowing.
Futures for December delivery jumped as much as 4 percent to a record $1,718.20 an ounce on the Comex in New York and traded at $1,712.90 an ounce at 11:47 a.m. Mumbai time. Silver futures climbed as much as 5.7 percent. Spot gold soared as much as 3.1 percent to $1,715.75 an ounce, also an all-time high.
Prices have surged 21 percent in 2011, gaining for an 11th year, as the sovereign debt crisis and a faltering economy boost haven demand. While George Soros sold most of his gold in the first quarter, John Paulson, who made $15 billion betting against subprime mortgages, is still the biggest investor in the largest exchange-traded fund backed by bullion. Goldman Sachs Group Inc. raised its price forecasts in a report released today.
“There’s just a pessimism or nervousness that’s associated with economies and currencies of these major nations,” Gavin Wendt, director at Sydney-based Mine Life Pty Ltd., said by phone. “At a time when investors are nervous of currencies, they’re nervous of equities, they’re nervous of everything, the only place for them to park their money is gold.”
S&P cut the long-term rating one level to AA+ from AAA on Aug. 5 while keeping the outlook at “negative,” criticizing the nation’s political system for failing adequately to address deficit reduction. Equities sank today, extending the market’s rout, as the dollar and oil slid.....read on