Gold futures rose to a record $1,500.50 an ounce as U.S. debt concerns weighed on the dollar, boosting demand for the precious metal as an alternative investment.
The greenback dropped against the euro on speculation that the European Central Bank will continue to raise borrowing costs as some nations struggle to contain sovereign debt. Standard & Poor’s yesterday revised its long-term outlook of U.S. debt to negative from stable. Before today, gold climbed 31 percent in the past year, and silver prices doubled.
“The U.S. credit rating will undoubtedly be lowered in the next few years,” said Michael Pento, a senior economist at Euro Pacific Capital in New York. “This will mean much higher borrowing costs and a much lower currency. International investors have been using gold and silver as an alternative currency and an alternative to the dollar, and this will only exacerbate and accelerate that process.”
Gold futures for June delivery rose $3.50, or 0.2 percent, to $1,496.40 at 1:08 p.m. on the Comex in New York. Gold for immediately delivery rose as much as 0.3 percent to an all-time high of $1,499.32.