World Business

Gold turns higher as Fitch downgrades Spain's credit rating

(Xinhua)
Updated: 2010-05-29 10:55

CHICAGO - Gold futures on the COMEX Division of the New York Mercantile Exchange ended a tad higher on Friday, as a downgrade in Spain's credit rating worsened the lingering concern over the widening eurozone debt crisis, and helped gold to stage an impressive turnaround in the last hour. Silver and platinum both dipped.

The most active gold contract for August delivery was up 60 cents, to finish at $1,215.0.

Fitch, the rating agency cut Spain's credit rating to AA-plus from AAA on Friday, and expected a very slow economic recovery of the nation in the next few year due to the harsh fiscal austerity plan.

Spain's downgrade reignited concerns over the festering eurozone debt problem, and dampened investor appetite for higher- yielding assets. Euro gave back all its Friday gains and continued its losses against the dollar. US stocks and oil market plunged as investors fret over the broader impact of eurozone debt crisis on global growth.

Related readings:  Gold snaps three-day drop as haven allure strengthens on Europe  Gold flies to record as investors seek safety  Gold shines as investors hunt for a safe haven  Gold surges to a fresh all time high

US Commerce Department said on Friday that consumer spending was unexpectedly flat last month, the weakest showing since September 2009, as Americans used growing wages to rebuild savings.

Gold appeared to be the only beneficiary amid waning risk appetite. Gold eased earlier in the session, as a sharp gain in the stocks market attracted more fresh investment, and investors tried to lock in gains before the long weekend after gold's rally this week. But the risk aversion fueled by Fitch's downgrade of Spain gave gold a strong lift. Gold soared prior to the close and managed to end a tad higher.

July silver was down 4.6 cents, or 0.2 percent, to settle at $18.422 per ounce. July platinum dropped $3.5, or 0.2 percent, to close at $1,549.4 an ounce.