Gold at second successive record in Europe

Gold hit a record for a second straight day on Wednesday, powered by deepening fears over the spread of the eurozone debt crisis, while the most recent batch of US data did not dispel concern about the world's biggest economy. The United States avoided an unprecedented debt default on Tuesday with a last-minute deal on raising the country's borrowing limit.
But credit ratings agencies are unconvinced over resilience of US finances, especially as growth has been patchy enough to spark fresh market speculation about what policy measures the Federal Reserve might use to boost the economy. The nervousness over the US economy was compounded by the latest developments in Europe, where Italian bond yields rose to their highest in over a decade above 6 percent, a level widely viewed as unsustainable, adding to the lure of gold as a safe-haven investment.
Meanwhile, the International Monetary Fund's monthly report on central bank reserves showed Thailand, Russia and Kazakhstan, among others, added to their holdings of gold two months ago, prolonging the trend in the official sector to put more of their reserves into bullion rather than hard currencies.
Spot gold was last quoted at $1,668.06 an ounce, up 0.5 percent on the day at 1410 GMT, having hit a record $1,672.65 earlier. US gold futures were last up 1.6 percent at $1,671.00 an ounce. "The current fundamentals in the gold market are supportive of these higher prices. The key factors that have been driving investment demand for gold - concerns about sovereign debt burdens, the long-term value of certain reserve currencies and fear of persistent inflation - are likely to continue for the foreseeable future," said Tom Holl, co-manager of the BlackRock World Resources Fund.
Gold is set for a 17 percent gain in 2011, which would mark an eleventh successive year of price rises. "The lack of a decent gold pullback has left many investors feeling frustrated and patience for a better buying opportunity is now wearing quite thin, which is why gold has attracted very decent buying this week," said UBS strategist Edel Tully in a note, adding the size of the speculative position in US gold futures posed a downside risk to gold.
In other precious metals, silver hovered near three month highs, trading 1.9 percent higher on the day at $41.54 an ounce, while platinum and palladium fell. Spot platinum was last down 0.6 percent at $1,780.99 an ounce, while palladium was down 2.1 percent, having released earlier gains, to trade at $804.97 an ounce.