Gold futures for August contract, at the Commodity Exchange (COMEX), increased as much as 1.03 per cent to US$1,557.60 per ounce, and settled at US$1,549.2 as contagion risk from Greece's debt crisis threatened to spread to Italy and Spain. Last week, Moody's Investors Service downgraded Portugal's credit rating to Ba2 from Baa1, made it the second Euro-zone country with a non-investment grade rating and renewed the concern that another European nation will need financial aid after Greece.
In another positive sign, rising global inflation also supported the gold prices as investors prefer to buy precious metals as a hedging strategy. The National Bureau of Statistics said on July 9, 2011 that China's Consumer Price Index increased to a three year high of 6.4 per cent in June 2011 which is exceeded the forecasted figure of 6.2 per cent. Last week, China increased its benchmark interest rates for the third time this year after inflation accelerated to the fastest pace since 2008. The one year lending rate increased to 6.56% from 6.31% and the one year deposit rate rose to 3.5% from 3.25%.
Moreover, the European Central Bank (ECB) on July 7 2011 increased its benchmark interest rate to 1.50 per cent, highest levels since March 2009, from 1.25 per cent to tame inflation.
Gold for August contract, at MCX, closed at Rs. 22,472 per 10 grams, up by 0.54 per cent, after opening at Rs. 22,356 against the previous closing price of Rs. 22,351. It touched the intra-day high of Rs. 22,566 with a business volume of 40,002 lots.
At the Commodity Exchange (COMEX), gold future for August contract closed at US$1,549.2 per ounce, up by $7.6, after opening at US$1,545 against the previous closing price of US$1,541.6. It touched the intra-day high of US$1,557.60 with a business volume of 138,169 lots.