Wednesday, August 10, 2011

Gold Hovers Below $1,800


NEW YORK—Comex gold futures floated below $1,800 a troy ounce as investors dug in for another volatile day in equity markets.

The most actively traded contract, for December delivery, was up $26, or 1.5%, at $1,769 a troy ounce in early trade on the Comex division of the New York Mercantile Exchange.

The thinly traded August-delivery contract was up $31.30, or 1.8%, at $1,771.30 a troy ounce.

The Standard & Poor's 500-stock index was down 2.5% at 1142.93 shortly after the market opened.

"Gold is going to hold its underlying value, especially with stocks starting to slide back off," said Frank McGhee, head precious-metals dealer at Integrated Brokerage Services in Chicago.

Gold's role as a haven from uncertainty and volatility has catapulted its price to record highs. Investors have been flooding the gold market in recent weeks amid concerns about the U.S. economy and Europe's sovereign-debt crisis.

"We remain nervous, that alone supports the gold market," said Frank Lesh, a broker and futures analyst with FuturePath Trading.

Gold prices got an added boost from the Federal Reserve, which said Tuesday that it would keep interest rates near zero until mid-2013. The monetary policy announcement also downgraded the Fed's outlook on U.S. economic growth.

Investors in search of a haven often choose between Treasury bonds, which earn interest, and gold, which doesn't. A low-interest-rate environment puts gold on an even footing with Treasurys.

"Capital flows look for returns and safety, and right now interest-bearing products don't give you much," Mr. Lesh said.

Write to Tatyana Shumsky at

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