Gold exchange traded funds soared Tuesday as prices climbed back above $1,700 an ounce with momentum and investors moved into safe havens on uncertainty over a solution to Europe’s debt woes.
SPDR Gold Shares (NYSEArca: GLD) was up more than 3% in the final hour of U.S. trading.
Gold was on track for its best three-day rise in a month, Reuters reported. European Union leaders are expected to meet Wednesday to discuss reducing Greece’s debt burden, recapitalizing European banks and boosting the bailout fund, according to the report.
One sticking point in the summit talks appears to be the size of the “haircut” on Greek bonds. Gold was also getting a lift Tuesday from talk the Federal Reserve may do more to lower borrowing costs, and the religious festival in India, Bloomberg reported.
“Nobody really wants to go short on gold,” Bernard Sin, head of currency and metal trading at bullion refiner MKS Finance, told Bloomberg. “I don’t think Europe will be out of the woods yet. There is physical demand out of India.”
“We’re seeing some progress in Europe, but the market’s been disappointed before,” added Nick Trevethan, senior commodities strategist at Australia & New Zealand Banking Group , in the article. “There’s still a lot of good reasons to be holding gold. The world is still relatively shaky, we’re a low interest rate environment in many parts of the world.”