NEW YORK (
rallied Wednesday as investors fled into the safe-haven asset as
global stock markets slid
Dow Jones Industrial Average
briefly fell below 10,000.
Gold for December delivery settled $7.90 higher to $1241.30 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,243.40 and as low as $1,230.90 on low volume during Wednesday's session. The
was rising 0.11% to $83.26 while the euro was rising 0.26% to $1.26 vs. the dollar. The spot gold price Wednesday was up $8, according to Kitco's gold index.
From Asia to Europe to the U.S., stocks were down, economic data was negative and growth worries persisted driving investors into gold. In Asia, the yen hit a 15-year high vs. the dollar which didn't bode well for the future of exports, which will now be more expensive to buy in other currencies. In Europe,
Standard & Poor's
downgraded Ireland's credit rating to AA- with a negative outlook. In the U.S., new-home sales plummeted more than 12% in July after the government's homebuyer tax credit expired.
Gold has rallied 1% this week as spooked investors sold stocks for gold, but thinning volume and a rocky equity market could keep prices volatile as investors may be forced to raise cash. Gold will also look to the
two-day meeting with world bankers in Wyoming, which begins Friday, for any signs of additional monetary easing.
Dow 10,000 Means Volatility For Gold Prices
"Every time the Fed has said something it's had a negative effect on general markets," says George Gero, vice president of global futures at RBC Capital Markets, which would spark a flight to safety into gold. For a short-term trade range, Gero is looking at "$1,175 as a bottom support, $1,250 for basically a real resistance level ... but the inside markets looks to me like its $1,200-$1,225."
Also adding fuel to the fire for gold bulls was the latest Gold Demand Trend report from the World Gold Council which said gold demand grew 36% in the second quarter. Overall demand was helped by a 118% surge in identifiable investment demand which offset a 5% decline in jewelry demand.
Video: Gold Buying Pops, But Can It Last? >>
Gold exchange-traded fund demand grew 414% to 291.3 tons primarily in May and June as the sovereign debt crisis in Europe exploded. The most popular gold ETF,
SPDR Gold Shares
, now the second largest ETF in the world, holds 1,298 tons. Shares were trading at $121.10.
"What we see is that current fundamentals support not only this gold price but going forward there is ... a positive outlook for gold," says Jason Toussaint, managing director of the U.S. region for the World Gold Council, which is funded by large global gold mining companies. "Investors are really acknowledging that gold may have a role in their portfolios as a long term strategic asset instead of a flight to safety."
settled up 64 cents to $19.02 while copper closed down 3 cents to $3.21.
, a risky but potentially profitable way to
, were rallying.
was up 3.22% to $10.10 while
Freeport McMoRan Copper & Gold
was down 0.52% to $66.70. The stock was suffering due to the company's large exposure to copper prices. Other gold stocks
were trading higher at $63.49 and $18.73, respectively.
Written by Alix Steel in New York.
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