CHICAGO, Aug. 9 (Xinhua) -- Gold futures on the COMEX Division of the New York Mercantile Exchange on Monday hit an all-time record after Standard & Poor's cut the U.S. credit rating, triggering wide concerns over the world's largest economy.
The most active gold contract for December delivery surged 61.4 U.S. dollars, or 3.7 percent, to 1,713.2 dollars per ounce, the highest closing in history. The metal's price hit up to 1,721.9 dollars during the intraday trading.
"Another unbelievable move in the Gold market!" said Mike Daley, a senior gold analyst with PFGBest Group. "The Standard and Poor's downgrade for the United States credit rating was the fuel that propelled this rally to historic levels."
The ratings agency Standard & Poor's Friday cut the long-term U. S. rating one level down 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.
"The downgrade sent a message of instability to the world's investors and a warning that even the world's largest economy is susceptible to a debt crisis," said Mike.
"There is heavy buying in gold because of the uncertainty surrounding the U.S. economy," said a trader. "As long as there is global uncertainty there will be savvier investors running to the Gold market as a safe-haven investment."
Meanwhile, U.S. stocks further plunged on Monday, enhancing the gold's appeal as an alternative investment. The Dow Jones Industrial Average fell more than 600 points, pulling it under 11, 000 for the first time since 2010's November, and the Standard & Poor's 500 Index declined 47.41 points, or 4 percent, to 1,151.97.
Monday also marked the biggest gain in gold's price since March 19, 2009. The metal has surged 21 percent in so far this year.
Standard & Poor warned that the U.S. rating may be cut to AA within two years if spending reductions are lower than what has been agreed to, interest rates rise or "new fiscal pressures" result in higher general government debt.
Goldman Sachs has raised its forecasts for gold futures to 1, 730 dollars in six months and 1,860 dollars in a year, in comparison with the previous estimates of 1,635 dollars and 1,730 dollars respectively. Some aggressive analysts even predicted that the prices may jump to 2,000 dollars in the next few weeks.
Silver for September delivery hiked 1.169 dollars, or three percent, to 39.38 dollars per ounce. Platinum for October delivery added 4.5 dollars, or 0.26 percent, to 1,723.6 dollars per ounce.