Gold Rises to Record as Rating Cut Spurs Buying

Gold Futures for December rose 3%

Gold Futures for December rose 3% (source: Bloomberg)

As reported by Bloomberg’s Debarati Roy and Tony C. Dreibus, gold climbed to a record after Standard & Poor’s cut the U.S. credit rating, fueling a slump in equities and commodities amid concern that the global economy is slowing.

The S&P 500 Index lost as much as 5.7 percent, while the Thomson Reuters/Jefferies CRB Index of 19 raw materials touched 317.6, the lowest since Dec. 17, after S&P cut the long-term U.S. rating one level to AA+ from AAA on Aug. 5. The agency described the outlook as “negative” and criticized the nation’s political system for failing to adequately address deficit reduction.

“There is heavy buying in gold because of the uncertainty surrounding the U.S. economy,” Matthew Zeman, a strategist at Kingsview Financial in Chicago, said in a telephone interview. “For gold, the sky is the limit.”

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