Gold hits 7 month high, close to $1000.00 an OZ. Europe getting much worse

Gold hit a fresh seven-month high on Tuesday after weaker-than-expected U.S. manufacturing data fueled fears over the economic outlook, boosting investment in bullion as a safe store of value.

Fears over a deepening recession in eastern Europe earlier in the session sent the metal to record highs in a raft of currencies—including the euro, sterling, the South African rand, the Indian rupee and the Canadian and Australian dollars.

Spot gold rose [US@GC.1 971.9 29.70 (+3.15%)] to $966.15/968.15 an ounce from $940.90 in New York late on Monday. Earlier it touched a high of $970.90 an ounce, its firmest since July 22.

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U.S. gold futures for April delivery on the COMEX division of the New York Mercantile Exchange rose $26.90 to $966.50 an ounce, having earlier touched a high of $968.40.

"We are seeing complete risk aversion, with equities selling off and the dollar rising," said VTB Capital analyst Andrey Kryuchenkov. "Investment demand is rising for gold."

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Fears over the outlook for the economy worsened after a survey showed manufacturing production in New York State fell to a record low in February.


AP
Wall Street stocks tumbled on concern the recession is worsening, taking the benchmark S&P 500 below the 800 level for the first time since Nov 21.

This added to gloom caused by credit rating agency Moody's statement that the recession in eastern Europe is likely to be more severe than elsewhere and would pressure financial strength ratings of local banks and their Western parents.

Such fears are boosting gold, analysts said.

"Gold is the asset of choice right now and given renewed concerns about eastern Europe and (with the) banking sector again under pressure, investors are looking at gold, said James Moore, an analyst at The BullionDesk.com.

While investment in products like gold-backed exchange traded funds has soared as investors seek a safe place for their cash, high prices are hurting jewellery demand in key centres of gold buying, India, China and the Middle East.

The benchmark April gold contract traded in India peaked at 15,379 rupees per 10 grams, boosted by safe haven buying and a weak rupee.
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