Gold prices higher on Greek debt concerns

AP News
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Posted: Sep 13, 2011 3:43 PM
Gold prices higher on Greek debt concerns

Gold prices rebounded Tuesday on mounting concerns about how the Greek financial crisis could affect the European economy.

Greece faces the prospect that it could run out of money if it does not get another round of bailout funds. There have been signs that European leaders will take steps to help Greece avoid default. German Chancellor Angela Merkel indicated Tuesday that Greece is making progress in complying with the requirements of its international creditors.

The uncertainty about what direction the Greece crisis will take and the slowing global economy have been driving gold prices higher for weeks. Investors consider the precious metal a relatively stable asset to hold when there the outlook for the economy is unclear.

"People are ... sitting and waiting for further developments out of the eurozone," Kingsview Financial analyst Matt Zeman said, referring to the countries that use the euro currency. Zeman and other analysts expect gold to continue to climb.

Gold for December delivery rose $16.80 to finish at $1,830.10 an ounce. The price is up 47 percent in the past year.

December silver rose 97.6 cents to end at $41.193 an ounce, a little more than double what it was a year ago. The silver market is smaller and more volatile than the one for gold, which can result in wider price swings.

In other trading, wheat fell 3.5 percent as U.S. producers are facing more competition from overseas growers.

The U.S. Agriculture Department on Monday predicted global wheat supplies will be about 194.6 million metric tons by the end of next summer. That was an increase of 5.7 million metric tons from an estimate issued in August.

In addition, U.S. producers will be hurt if the dollar grows stronger against the euro. Since commodities are priced in dollars, a stronger dollar makes them more expensive for buyers who use other currencies such as the euro.

December wheat fell 25.25 cents to end at $7.02 a bushel, December corn fell 22.5 cents to $7.23 a bushel and November soybeans fell 4.25 cents to $13.9175 a bushel.

In other metals trading, December copper rose 0.45 cent to finish at $3.97 a pound, October platinum rose $4.10 to $1,813.50 an ounce and December palladium rose $17.15 to $728.50 an ounce.

Oil prices rose on expectations that the government will report on Wednesday a decline in supplies after some oil platforms and refineries were shut down temporarily when Tropical Storm Lee hit the Gulf Coast region earlier this month.

Benchmark oil rose $2.02 to finish at $90.21 per barrel on the New York Mercantile Exchange. Heating oil fell 1.14 cents to finish at $2.9361 per gallon, gasoline futures rose 0.42 cent to $2.7424 per gallon and natural gas rose 9.5 cents to $3.98 per 1,000 cubic feet.