NEW YORK (
climbed Monday as persistent signs of a weakening global economic recovery reignited gold's appeal as a safe haven asset.
Gold for December delivery settled $9.60 higher to $1,226.20 an ounce at the Comex division of the New York Mercantile Exchange. The gold price today has traded as high as $1,229.50 and as low as $1,216.20 and was continuing to climb in after-hours trading. The
was slipping 0.54% to $82.47, while the euro was rallying 0.56% to $1.28 vs. the dollar. The spot gold price Monday was rising more than $9, according to Kitco's gold index.
Investors bought gold Monday on news that
China surpassed Japan as the world's second largest economy
Japan's economy grew an annualized 0.4% in the second quarter
vs. 5% in the first quarter. China is expected to grow this year at 10% with its nominal gross domestic product for the second quarter ramping up to $1.337 trillion.
Gold Prices Close To A Breakout
The news only served to spook investors, however, and led them to dump risky stocks for the safety of gold. Many analysts are worried that China won't be able to sustain this explosive growth. Last week, China's customs bureau said its trade surplus ballooned to an 18-month high as imports rose only 22.7%, well below expectations, as the country bought less. China has also taken steps in recent months to decrease the amount of money in circulation by requiring banks to hold more money in their reserves.
UBS also downgraded its outlook for the U.S. economy in 2010, which dammaged risk appetite and heightened investor anxiety over reports that the
Dow Jones Industrial Average's
triple-digit free fall Thursday triggered a technical anomaly, the Hindenburg Omen, which can forecast a market crash. Although there are a lot more technical indicators and market conditions needed to create this perfect storm, the news, coupled with slowing global growth, generated enough buzz to substantially increase gold's appeal as a safe haven asset.
"Despite the decline in economic optimism, metals are in a positive mood ... with gold trading at a one-month high above $1,220," says James Moore analyst at TheBullionDesk.com in his daily metals report. "Clearance of the $1,215-18 band could open the way to challenge resistance above at $1,244."
Gold prices have rallied 2% in August, while the Dow Jones Industrial Average has fallen1.5%. Investors might be forced to take profits in gold to cover losses in stocks. But if gold is able to break through and hold the $1,230 level, then many investors could buy gold for fear of missing another big rally.
settled up 30 cents to $18.41 while copper closed 3 cents higher to $3.28.
Gold mining stocks, an alternative way to
, were rallying.
Freeport McMoRan Copper & Gold
was up 1%to $70.81 while
rallied to $9.90. Other gold stocks
were trading at $14.19 and $5.68, respectively.
Written by Alix Steel in New York.
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