Investing.com – Gold futures rallied to a fresh record high on Monday, climbing above the psychologically important USD1,700-an-ounce level for the first time, after an S&P downgrade of U.S. sovereign debt sparked a flight to safety.
On the Comex division of the New York Mercantile Exchange, gold futures for October delivery traded at USD1,705.65 a troy ounce during late Asian trade, jumping 2.45%.
It earlier rose as much as 2.9% to trade at an all-time high of USD1,716.25 a troy ounce, eclipsing the previous high of USD1,683.45 a troy ounce it hit last Thursday.
Ratings agency Standard and Poor's downgraded the U.S. sovereign debt rating by one notch to AA+ from AAA after markets closed Friday.
The ratings agency kept the U.S. rating outlook at negative, suggesting a further downgrade could be possible within the next 12 to 18 months.
S&P said the debt ceiling deal reached by lawmakers to cut the federal deficit by an estimated USD2.1 trillion over a decade did not go far enough and “America’s governance and policymaking is becoming less stable, less effective, and less predictable than what we previously believed.”
Weakness in the dollar had also contributed to gold’s strength. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.6% to trade at 74.32, the lowest since August 4.
Global financial service provider Royal Bank of Scotland said in a report earlier that, "There are few places you can obviously hide and the ones that you can hide in are doing very well. Gold is the beneficiary because there is no central bank to sell it."
Gold is often seen as an alternative currency in times of global economic uncertainty and a refuge from financial risk.
Elsewhere on the Comex, silver for September surged 3.92% to trade at USD39.81 a troy ounce, as investors sought a cheaper alternative to gold.
On the Comex division of the New York Mercantile Exchange, gold futures for October delivery traded at USD1,705.65 a troy ounce during late Asian trade, jumping 2.45%.
It earlier rose as much as 2.9% to trade at an all-time high of USD1,716.25 a troy ounce, eclipsing the previous high of USD1,683.45 a troy ounce it hit last Thursday.
Ratings agency Standard and Poor's downgraded the U.S. sovereign debt rating by one notch to AA+ from AAA after markets closed Friday.
The ratings agency kept the U.S. rating outlook at negative, suggesting a further downgrade could be possible within the next 12 to 18 months.
S&P said the debt ceiling deal reached by lawmakers to cut the federal deficit by an estimated USD2.1 trillion over a decade did not go far enough and “America’s governance and policymaking is becoming less stable, less effective, and less predictable than what we previously believed.”
Weakness in the dollar had also contributed to gold’s strength. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.6% to trade at 74.32, the lowest since August 4.
Global financial service provider Royal Bank of Scotland said in a report earlier that, "There are few places you can obviously hide and the ones that you can hide in are doing very well. Gold is the beneficiary because there is no central bank to sell it."
Gold is often seen as an alternative currency in times of global economic uncertainty and a refuge from financial risk.
Elsewhere on the Comex, silver for September surged 3.92% to trade at USD39.81 a troy ounce, as investors sought a cheaper alternative to gold.