Gold Rallies for Fourth Day
Source: Bloomberg, Nicholas Larkin and Pham-Duy Nguyen (5/25/11)
"The yellow metal is heading for the longest rally in three weeks as European debt stokes demand."
Gold rose for a fourth day, heading for the longest rally in three weeks, as Europe's debt crisis increased investor demand for the precious metal as a protection of wealth.
Christian Noyer, a Governing Council member of the European Central Bank, yesterday ruled out a restructuring of Greece's debt, calling it a "horror story" that would leave the nation shut out of financing for years. Gold priced in euros and British pounds climbed to records today as policy makers disagree over how to solve Greece's fiscal woes.
"We are bullish of gold in both U.S. dollar terms and non-U.S. dollar terms," said Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter. "The trend here is clearly to the upside as the problems in Europe prove to be more and more intractable."
Gold futures for June delivery rose $5.30, or 0.3 percent, to $1,528.60 an ounce at 11:21 a.m. on the Comex in New York. Before today, the metal had gained 28 percent in the past year, touching a record $1,577.40 on May 2.
"The trump-card currency of choice is gold, and in all likelihood, it shall become even more readily embraced, not less so, in the days and weeks ahead as Europe's problems worsen," Gartman said.
Some European Union officials have supported a so-called reprofiling of Greece's debt, whereby its payback period could be lengthened and interest costs may be reduced. Moody's Investors Service is "very likely" to class a reprofiling of Greek debt as a default, according to its EMEA Chief Credit Officer Alastair Wilson.