NEW YORK (Dow Jones)--Gold futures pushed to record highs Tuesday as concerns about a slowdown in global growth and Europe's debt crisis spurred investor demand for the metal as a refuge.Read the rest here.
U.S. leaders Tuesday gave final approval to legislation raising the country's debt limit, averting a default. But the deal wasn't enough to stem the tide of investment in perceived safe-haven assets, as investors remain cautious on the chance that U.S. could see its credit rating downgraded and as growth stumbles across much of the developed world.
The most actively traded gold contract, for December delivery, climbed $22.80, or 1.4%, to settle at a record $1,644.50 a troy ounce on the Comex division of the New York Mercantile Exchange. The contract climbed as high as $1,646.80 an ounce, a record intraday high.
"There's still concern about the weak economy, growth generally, weak [purchasing managers' indexes] in a range of countries," said David Jollie, strategic analyst at Mitsui Global Precious Metals. U.S. debt was only part of the story behind gold's recent rise, he added.
Weaker-than-expected U.S. and European manufacturing data Monday dampened investors' appetite for risky assets. And currency markets Tuesday were rattled as worries about Europe's debt crisis sent Italian and Spanish bond yields to their widest levels since the adoption of the euro.
Some investors turn to gold as a refuge from turmoil in other markets, and the metal has reached all-time highs for four consecutive weeks. The Swiss franc hit record highs against the U.S. dollar and euro Tuesday and Treasury prices rose, highlighting the demand for a safe place to park cash.
"People are concerned about what currencies they hold," said Sterling Smith, a market analyst with Country Hedging. "Risk aversion is growing stronger."
Sentiment in the gold market also received a boost from the news that South Korea's central bank made its first gold purchases in 13 years. The bank acquired 25 tons of gold during June and July, bringing its total reserves to 39.4 tons at the end of last month. Central banks have been moving to reduce their dependence on the U.S. dollar, the world's chief reserve currency.
The central banks of Russia, Mexico and Thailand have also announced substantial gold purchases this year.