Gold Rises to Record as Rating Cut Spurs Buying

Gold Rises to Record as Rating Cut Spurs Buying - Bloomberg

Gold climbed to a record after Standard & Poor's cut the U.S. credit rating, fueling a slump in equities and commodities amid concern that the global economy is slowing.

The S&P 500 Index lost as much as 5.7 percent, while the Thomson Reuters/Jefferies CRB Index of 19 raw materials touched 317.6, the lowest since Dec. 17, after S&P cut the long-term U.S. rating one level to AA+ from AAA on Aug. 5. The agency described the outlook as "negative" and criticized the nation's political system for failing to adequately address deficit reduction.

"There is heavy buying in gold because of the uncertainty surrounding the U.S. economy," Matthew Zeman, a strategist at Kingsview Financial in Chicago, said in a telephone interview. "For gold, the sky is the limit."

Gold futures for December delivery rose $61.40, or 3.7 percent, to settle at $1,713.20 an ounce at 1:45 p.m. on the Comex in New York, the biggest gain since March 19, 2009. Earlier, the metal surged to $1,721.90, the highest ever. In after-hours trading, it touched $1,723.40.

Prices may jump to $2,000 in the next few weeks, Zeman said.

Read the rest of te story here: http://www.bloomberg.com/news/2011-08-08/gold-advances-to-record-as-u-s-credit-rating-cut-boosts-demand-for-haven.html

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