Gold Prices Surge More Than 1%, Rise Above $1200 Level

Investing.com – Gold prices surged more than 1% higher on Tuesday, climbing back above the psychologically important $1,200 level amid increased safe haven demand as concerns over Italy’s fiscal issues hit financial markets.

December were up 1.24% to $1,206.60 by 09:53 AM ET (13:53 GMT) on the Comex division of the New York Mercantile Exchange.

Investor concerns over Italy intensified Tuesday, after the head of the lower house’s budget committee said the country would have solved its fiscal problems with its own currency.

The comments added to a war of words with the European Union over the populist government’s budget proposal which seeks to increase spending and cut taxes, but would raise Italy’s debt and breach EU budget rules.

EU officials have warned its plan to borrow billions of extra euros to fund spending pledges could tip the bloc back into crisis, but Deputy Prime Minister Luigi Di Maio said Italy would not change its budget deficit targets.

Gold’s gains came despite broad dollar strength, with the , which measures the greenback’s strength against a basket of six major currencies, up 0.29% to 95.20.

The yellow metal ended the third quarter down 4.6% after falling 0.9% in September as rising U.S. interest rates and the dollar’s march higher weighed.

Interest rate increases and higher U.S. bond yields dampen appeal for gold, which offers no yield. They also tend to boost the dollar, making dollar-denominated gold more expensive for holders of other currencies.

Elsewhere in metals trading, December silver advanced 2.64% to $14.89 a troy ounce, while January platinum was trading at $836.8, up 1.08% for the day.
Among base metals, December added on 2.03% to trade at $2.845.

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