Demand for gold stays strong; closes above $1,600

AP News
Posted: Jun 12, 2012 4:47 PM
Demand for gold stays strong; closes above $1,600

The price of gold rose above $1,600 an ounce again as borrowing costs surged for Italy and Spain, the latest reminder that Europe's debt mess continues to fester.

Gold for August delivery rose $17, or just over one percent, to settle at $1,613.80 an ounce Tuesday. Gold has been rising in fits and starts since May 16, when it closed at a 2012 low of $1,536.60 an ounce.

Silver also rose a bit more than 1 percent, gaining 33 cents to settle at $28.949 an ounce.

Investors are still on edge over Europe, as seen in the latest increase in borrowing costs for Italy and Spain. The yield on Spain's 10-year government bond jumped to a euro-era high on Tuesday as questions lingered over Europe's emergency loans to Spanish banks, which were announced over the weekend. The ratings agency Fitch also downgraded 18 Spanish banks Tuesday.

More uncertainty for Europe lies ahead as Greek voters go to the polls on Sunday. If they favor politicians opposed to the terms of the country's bailout loans, as many expect, it would raise the possibility that the country could leave the euro and undermine confidence in the region's currency union.

Platinum also rose on Tuesday. The July contract was up $5.10 to $1,454.40. Copper for July delivery slipped 0.75 cent to $3.3355 a pound and palladium for September delivery fell 90 cents to $624.25 an ounce.

In trading for agricultural commodities, July wheat fell 14.50 cents to $6.16 per bushel, July corn fell 8 cents to $5.84 a bushel and July soybeans rose 10.25 cents to $14.35 per bushel.

Crude oil rose 62 cents to close at $83.32 per barrel. Heating oil fell 1.42 cents to end at $2.6215 per gallon, gasoline dropped 0.64 cent to $2.6502 per gallon and natural gas rose 1.4 cents to $2.232 per 1,000 cubic feet.