NEW YORK (
settled at a new high Tuesday as investors sought the safety of the metal on news that the eurozone stress tests were weaker than previously reported.
Gold for December delivery closed $8.20 higher to $1,259.30 an ounce at the Comex division of the New York Mercantile Exchange. The gold price Tuesday has traded as high as $1,261.60 and as low as $1,246.40 during the session. The
U.S. dollar index
was rising 0.81% to $82.74 while the euro was falling 1.25% to $1.27 vs. the dollar. The spot gold price Tuesday was soaring $11, according to Kitco's gold index.
Gold prices broke their record close of $1,258 an ounce as investors worried that eurozone banks might be in worse shape than previously thought. The
Wall Street Journal
reported over the weekend that the eurozone bank stress tests were lenient and that 91 banks used slack guidelines to avoid revealing how much exposure they had to sovereign debt.
The fears coupled with Ireland's push to stabilize its flailing
Anglo Irish Bank
and news that 10 of Germany's largest banks will need to raise $135 billion re-ignited sovereign debt fears among investors. Gold was continuing its 5.6% August rally and will now be looking to top its record intra-day high of $1,264 an ounce.
Investors were also digesting President Obama's announcement of a $50 billion stimulus package for infrastructure. Obama is also expected to unveil more small business tax credits on Wednesday.
With a big push from Republicans to extend the Bush-era tax credits, which are set to expire at the end of the year, there are questions as to how the government will pay for additional stimulus. Any hints that the government will print more money or that the
will increase the size of its balance sheet will support higher gold prices as investors turn to the metal as a form of money.
"[Gold] remains broadly underpinned," says James Moore, analyst at
in his daily metals report. Moore says gold is continuing to "erode overhead resistance as investors turn towards safe-haven asset classes." Moore believes a close over $1,254 would be a bullish signal to push gold into new record high territory.
were lagging gold closing down 3 cents to $19.91 while copper settled down 2 cents at $3.47.
Gold mining stocks
, a risky but potentially profitable way to
, were mixed.
Freeport McMoRan Copper & Gold
was flat at $78.42 while
was down 0.80% to $17.29. Other gold stocks
were trading higher at $6.47 and $14.78, respectively.
Written by Alix Steel in New York.
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