By Debarati Roy - Sep 10, 2011 1:55 AM GMT+0700
Gold futures rose for the second straight day in New York as renewed concern that the Greek debt crisis will worsen and signs of a slowing global economy spurred demand for the metal as a store of value.
The MSCI All-Country World Index fell as much as 3.1 percent, and the Standard & Poor’s 500 Index slipped 3.1 percent after German Chancellor Angela Merkel’s government said it is preparing plans to shore up banks in the event that Greece fails to meet the terms of its aid package and defaults. President Barack Obama yesterday proposed a $447 billion plan to create jobs and boost the U.S. economy.
“The Greece problem is huge, and people also are skeptical about how much of Obama’s plan will be translated into action,” Frank Lesh, a trader at FuturePath Trading, said in a telephone interview from Chicago. “Equities are tumbling, and the flight to safety has begun.”
Gold futures for December delivery gained $2, or 0.1 percent, to settle at $1,859.50 an ounce at 1:49 p.m. on the Comex in New York. This week, the price fell 0.9 percent after the metal surged to a record $1,923.70 on Sept. 6. After today’s close, the metal slid to $1,847.30 in electronic trading.
Budget-Cutting Plans
Obama, speaking before a joint session of Congress, demanded six times that lawmakers act “right away” on a plan that would boost spending on infrastructure, stem teacher layoffs and cut in half the payroll taxes paid by workers and small business owners. Federal Reserve Chairman Ben S. Bernanke said policy makers will discuss the tools they may need to use to aid the recovery at their meeting this month.
Canadian Finance Minister Jim Flaherty said Greece may have to leave the euro if it fails to press ahead with its budget- cutting plans.
Gold is in the 11th year of a bull market, the longest winning streak since at least 1920 in London, as investors seek to diversify away from equities and some currencies. The metal has rallied 31 percent this year, outperforming global stocks, commodities and Treasuries.
Yesterday, CME Group Inc., the parent company of the Comex, raised the margin requirement for the Cleared OTC London Gold Forwards contract to $9,450 per contract, the same level as that for New York gold futures. The OCT contract had no trading volume or open interest, according to data on the CME website.
Silver futures for December delivery fell 90.6 cents, or 2.1 percent, to settle at $41.624 an ounce on the Comex. The price slid 3.4 percent this week, narrowing this year’s gain to 35 percent.
On the New York Mercantile Exchange, platinum futures for October delivery declined $16.60, or 0.9 percent, to $1,837.90 an ounce. Palladium futures for December delivery retreated $26.70, or 3.5 percent, to $738.60 an ounce.
To contact the reporter on this story: Debarati Roy in Mumbai at droy5@bloomberg.net
To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net
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