Forexpros – Gold futures regained strength on Tuesday, after rating agency Standard & Poor’s downgraded Italy’s sovereign debt rating, fuelling concerns that the euro zone’s debt crisis is worsening.
On the Comex division of the New York Mercantile Exchange, gold futures for October delivery traded at USD1,788.25 a troy ounce during late Asian trade, climbing 0.65%.
It earlier rose as much as 0.75% to trade at a daily high of USD1,790.35 a troy ounce.
S&P downgraded Italy’s sovereign credit rating by one notch to A from A+ and kept its outlook on negative, citing weakening economic growth prospects and higher-than-expected levels of government debt.
Meanwhile, fears over a potential Greek default lingered as talks between officials from the European Union and the International Monetary Fund with Greek finance minister Evangelos Venizelos on Monday failed to produce an agreement on whether the debt-laden country will receive the next tranche of aid.
Greece’s Finance Ministry said that talks would continue on Tuesday.
Strong physical demand in India also lent support as consumers began stepping up purchases of bullion ahead of the gold-buying wedding and festival season due to start in late-September.
Gold futures found further support as the previous day’s 1.8% drop contributed to some bargain-buying across Asian markets.
The World Gold Council said on Monday that gold demand in China could rise 10% this year, citing increased investor demand as a hedge against rising consumer prices.
The WGC added that India and China accounted for 54% of worldwide consumption in the second quarter. India is the world’s largest gold consumer, followed by China.
Elsewhere on the Comex, silver for December delivery jumped 1.23% to trade at USD39.64 a troy ounce, while copper for December delivery rose 0.5% to trade USD3.807 a pound.
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