Gold hits fresh high as focus turns to weak global economy
Singapore: Gold surged to a fresh record high on Wednesday as investors sought a safe haven in the face of a fragile global economy and mounting financial market pressure on Italy in the euro zone's widening debt crisis.
Spot gold rose to an all-time high of USD 1,661.14 in early Asian hours, hitting its ninth record since July 13. It was trading at USD 1,652.69 by 0009 GMT, down 0.4 percent.
US gold rose 0.7 percent to USd 1,655.3.
Gold jumped 2.6 percent on Tuesday, its biggest gain since early November just after the US Federal Reserve launched a second round of government debt purchases, or quantitative easing. It has only fallen five times in the past 23 sessions.
The strength in gold took many by surprise, as investors had expected gold to take a dip once the US debt crisis was resolved.
"We thought the increase in debt ceiling would provide a platform from which they could have some breathing space," said Jonathan Barratt, managing director at Commodity Broking Services based in Sydney.
"But Wall Street took it as a bad sign the debt problem is there, which means there would be no stimulus because no one can afford it. As a result of that, gold was taken to a new high."
Data showing US consumer spending falling in June for the first time since September 2009 overshadowed the US deficit-cutting package that raised the debt ceiling and allowed the United States to escape default.
Europe's second biggest debtor nation, Italy, found itself sucked deeper into the euro area danger zone, prompting emergency consultations in Rome and among European capitals.
Yields on Italian and Spanish bonds hit their highest levels in 14 years, with five-year Italian yields reaching the same level as Spain's in a sign Rome is overtaking Madrid as a key focus of investors' concern about debt sustainability.