Gold hits new high of $1,261 an ounce
Gold futures rose to a record $1,261 an ounce on demand for a haven amid Europe's fiscal woes and dimming prospects for the US economy.
The metal has climbed this year, outperforming equities and bonds, while the euro has slumped 14pc. A majority of Greeks believe the country may go bankrupt, an opinion poll showed. Spain faces €24.7bn of maturing debt in July and may need to use a European Union financial lifeline.
"The problems over in Europe are just as pernicious over here in the US," said Michael Pento, the chief economist at Delta Global Advisers. "You can't trust sovereign debt and sovereign currency. Gold is the only real honest money that we have."
Gold futures for August delivery rose $12.30, or 1pc, to $1,261 on the Comex in New York. Before this, the record was $1,254.40 on June 8. This month, the metal reached all-time highs in euro, sterling and Swiss francs.
Gold for immediate delivery reached a record $1,260.78 yesterday.
Reports yesterday showed US jobless claims rose unexpectedly and manufacturing in the Philadelphia region missed forecasts by analysts.
"People are looking at the euro as a wake-up call and they're sceptical of a US recovery," said Adam Klopfenstein, a senior market strategist at Lind-Waldock, a broker in Chicago.
"The big fear is that there are going to be other governments who are going to have sovereign-debt risks. People are clamouring to get into gold."
Gold may reach $1,400 this year and rise as high as $1,600 in 2011 if the Federal Reserve is forced to keep interest rates at a record low to stimulate the economy, Mr Pento of Delta Global said.