CCTV.com - CNTV English - CCTV News


Homepage > News > Biz >

Gold hits record on U.S. rating cut

08-10-2011 09:08 BJT

CHICAGO, Aug. 8 (Xinhua) -- Gold futures on the COMEX Division of the New York Mercantile Exchange on Monday hit an all-time record after Standard & Poor's cut the U.S. credit rating, triggering wide concerns over the world's largest economy.

A Nepalese jewelry store keeper arranges gold jewelry in Kathmandu August 8, 2011. Gold hit an all-time high on August 8, 2011 and investors sold off other commodities from oil to grains, fleeing from riskier assets after the U.S. loss of its prized AAA credit rating stoked fears about economic growth. Gold broke through the $1,700 per ounce mark for the first time, extending its bull run as a safe haven asset amid worries for global growth after agency Standard & Poor's (S&P) cut its rating for U.S. debt late on Friday (August 5, 2011). (Xinhua/Reuters)

The most active gold contract for December delivery surged 61.4 U.S. dollars, or 3.7 percent, to 1,713.2 dollars per ounce, the highest closing in history. The metal's price hit up to 1,721.9 dollars during the intraday trading.

"Another unbelievable move in the Gold market!" said Mike Daley, a senior gold analyst with PFGBest Group. "The Standard and Poor's downgrade for the United States credit rating was the fuel that propelled this rally to historic levels."

The ratings agency Standard & Poor's Friday cut the long-term U. S. rating one level down to AA+ from AAA on Aug. 5. The agency described the outlook as "negative" and criticized the nation's political system for failing to adequately address deficit reduction.

"The downgrade sent a message of instability to the world's investors and a warning that even the world's largest economy is susceptible to a debt crisis," said Mike.

"There is heavy buying in gold because of the uncertainty surrounding the U.S. economy," said a trader. "As long as there is global uncertainty there will be savvier investors running to the Gold market as a safe-haven investment."

Meanwhile, U.S. stocks further plunged on Monday, enhancing the gold's appeal as an alternative investment. The Dow Jones Industrial Average fell more than 600 points, pulling it under 11, 000 for the first time since 2010's November, and the Standard & Poor's 500 Index declined 47.41 points, or 4 percent, to 1,151.97.

Monday also marked the biggest gain in gold's price since March 19, 2009. The metal has surged 21 percent in so far this year.

Standard & Poor warned that the U.S. rating may be cut to AA within two years if spending reductions are lower than what has been agreed to, interest rates rise or "new fiscal pressures" result in higher general government debt.

Goldman Sachs has raised its forecasts for gold futures to 1, 730 dollars in six months and 1,860 dollars in a year, in comparison with the previous estimates of 1,635 dollars and 1,730 dollars respectively. Some aggressive analysts even predicted that the prices may jump to 2,000 dollars in the next few weeks.

Silver for September delivery hiked 1.169 dollars, or three percent, to 39.38 dollars per ounce. Platinum for October delivery added 4.5 dollars, or 0.26 percent, to 1,723.6 dollars per ounce.

Editor:Wang Xiaomei |Source: Xinhua

Hot Videos view more

The celebrations are still continuing as the victorious coach, Joachim Loew, has been honored for his achievement in his hometown of Freiburg.
Germany coach Loew honored in hometown of Freiburg

Chinese men´s national team continued its preparations for next year´s Asian Cup, as they managed a one-all draw against visitors Jordan during a football friendly in Harbin, the capital city of Northeast China´s Heilongjiang Province.
China held to 1-1 draw by Jordan

The defending world champs came into the contest with a perfect 6-and-oh record, but they would be in for a tough first half before opening things up in the second.
USA beat Slovenia 119-76 in quarter-finals

Hot Stories more

UK authorities believe killer of James Foley is a British national

Across the UK the hunt is on for James Foley’s killer, who authorities believe is a British national. As Richard Bestic reports from London, Prime Minister David Cameron cut short his summer break to lead his government’s response.

Israeli war jets renews Gaza strike as truce talks stalled

Three Palestinians were killed and 40 others wounded in the intensive Israeli war jets´ airstrikes on the Gaza city on Tuesday night, shortly before an end of a 24-hour ceasefire in the Gaza Strip,

Missouri police arrest dozens after violent night

As the protests in the town of Ferguson, Missouri turned violent with police facing ´heavy gunfire´ from some ´criminal elements´, cops fired tear gas, stun grenades and arrested 31 demonstrators on Monday night.

Picture in news more

More Video News

Choose TV Program