Forexpros – Gold futures were up for a fourth day on Wednesday, rallying to a one-month high as safe haven demand returned amid concerns that a critical European Union summit later in the day would disappoint expectations.
On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,715.85 a troy ounce during early European trade, jumping 0.91%.
It earlier rose by as much as 1.05% to trade at USD1,721.25 a troy ounce, the highest price since September 23.
Gold futures rallied nearly 3% on Tuesday after a planned a meeting of European finance ministers, scheduled to take place ahead of the summit, was cancelled, casting doubts over hopes that European leaders would be able to make a breakthrough on a plan to tackle the region’s ongoing debt crisis.
Adding to pessimism, German Chancellor Angela Merkel said Tuesday that Germany did not support language in a draft proposal for the EU summit that suggests the European Central Bank should continue purchasing bonds on the secondary market.
Gold is often considered a haven during times of financial turmoil, but for the past two months, the precious metal has risen and fallen in line with riskier assets, such as stocks and commodities. But that correlation finally unraveled on Tuesday.
European lender HSBC said in a report late Tuesday that, “The catalyst was the finance ministers’ meeting cancellation. That really just unleashed a very strong wave of safe-haven buying.”
Meanwhile, strong physical demand in Asia continued to underpin prices. Buyers in India bought the precious metal as Diwali, one of the major Indian gold-buying festivals, started Wednesday.
Consumer in China increased purchases of the metal as demand typically picks up during the National Day holidays at the start of October and lasts through the Lunar New Year in January.
India is the world’s largest gold consumer, followed by China.
Elsewhere on the Comex, silver for December delivery rose 0.76% to trade at a one-month high of USD33.30 a troy ounce, while copper for December delivery surged 2.23% to trade at USD3.497 a pound.
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