As doubt swirled around Greece and its ability to avoid default, skittish investors returned to the traditional safe haven of gold, driving its price higher after several weeks in the doldrums.
Reuters reported that Tuesday saw the price of spot gold bid at $1,544.10 per troy ounce in midday European trading. Late on Monday in New York, it reached $1,545.90, its highest since June 9. On May 2, it had hit a record high of $1,575.79 per ounce. RBS analyst Nick Moore was quoted in the report saying, "Gold is inextricably linked to the events in Greece; both gold and silver are hostage to contagion fears. The elevation of gold can be firmly nailed on safe-haven buying."
Worries over Greece’s potential failure to enact further austerity measures and fears of contagion throughout the euro zone to Spain, Ireland and Italy—that last nation warned by Moody’s over the weekend about a possible downgrade—have sent investors scrambling for safety.
An unidentified precious metal trader was quoted saying, "The default chorus is getting louder; people are wondering where this is going to end, perhaps Greece will leave the euro. I wouldn't be surprised to see gold heading toward record highs."
Andrey Kryuchenkov, analyst at VTB Capital, characterized the situation this way in the report: "Uncertainty still haunts market participants with small-scale safe haven buying pushing bullion prices back up. Euro zone's debt woes are fueled by Greece's failure to adopt fresh austerity measures while it makes the situation worse for other peripheral states with the cost of sovereign funding on the rise."
Silver was carried along for the ride, reaching $36.21 per ounce. That is its highest since June 13. Platinum was bid at $1,741.00 from $1,726.95, and palladium at $751.00 from $743.65.