Gold settles at record high as investors worry about global economic recovery

Gold settles at record high amid economic fears

Gold prices settled at a record high Tuesday following renewed worries about European banks and the global economy.

Gold for December delivery added $8.20 to settle at $1,259.30 an ounce after reaching $1,261.60 earlier in the day. Its record high settlement price was $1,258.30 an ounce, although it has reached an intraday high of $1,266.50 an ounce. Both occurred in late June.

Some analysts believe gold could rise even higher in the months ahead as investors use the asset as a hedge against riskier bets and as more people buy gold during the fall festival season in India.

IG Markets analyst Dan Cook speculated gold could reach $1,295 an ounce to $1,300 an ounce this fall. He noted gold prices have risen in September in all but three of the past 15 years.

Investors focused on reports that raised concerns about the global economy.

European Union finance ministers acknowledged the recovery remains fragile, and news reports said European banks may have more risky government debt on their books than previously disclosed.

A Wall Street Journal report claimed European “stress tests” of 91 banks in July understated some lenders’ holdings of potentially risky debt. The Financial Times said Germany’s top 10 banks will have to raise as much as €105 billion ($135 billion) to meet new capital requirements.

“Against that backdrop, I think you’ll continue to see strong investment demand for gold as a hedge,” CPM Group analyst Carlos Sanchez said.

The combined report also hit other commodities, which ended the day on a mixed note.

In metals contracts for December delivery, silver slipped 3.5 cents to settle at $19.914 an ounce and copper lost 2.95 cents to $3.4705 a pound.

September palladium fell $7.45 to settle at $521.60 an ounce and October platinum settled down $4.80 at $1,556.30 an ounce.

Energy contracts were mixed.

In October contracts on the New York Mercantile Exchange, benchmark crude fell 51 cents to settle at $74.09 a barrel; heating oil added 1.7 cents to $2.0743 a gallon, gasoline rose 1.34 cents to settle at $1.9329 a gallon and natural gas lost 2.7 cents to settle at $3.852 per 1,000 cubic feet.

In grains contracts for December, wheat fell 6 cents to $7.3525 a bushel and corn added 1.75 cents to $4.6625 a bushel. November soybeans added 17 cents to $10.52 a bushel.

Associated Press writer Carlo Piovano contributed to this report.