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NYP: Gold rises on sovereign debt-load concerns

By PAUL THARP
Last Updated: 4:32 AM, May 13, 2010
Posted: 12:52 AM, May 13, 2010

Wall Street's recovery rally gained steam for the third straight day while gold raced to a new pinnacle as the world's safest bet against market jitters.

Gold approached the breakthrough $1,250-an-ounce mark, with analysts predicting its climb won't slow until the price hits $1,500, thanks to flat outlooks for both the dollar and euro as all currencies struggle to hold value against mounting sovereign debt.

"Every major government in the world has been reckless stewards of their currencies," portfolio manager James Daily of Team Financial Asset Management told Bloomberg News. He sees gold hitting $1,300 this month and $1,500 by the fourth quarter.

Gold continued its recent tear — breaking its previous record high of $1,226.30 yesterday. Since early February, spot gold prices are up 14 percent.

Gold futures reached a record $1,243.10 per ounce during New York trading, but climbed in after-market trading to an all-time high of $1,249.20 an ounce. Its price has soared 14 percent in the past three months. Dealers said demand for pure gold jumped 10-fold since last Thursday's Wall Street crash and Europe's controversial $1 trillion bailout package.

Meanwhile, investors pushed up stocks here and abroad amid signs that the global economy is showing hints of a comeback.

US shares posted their best three-day run in nearly a year, led by technology stocks.

The Dow Jones industrial average climbed 1.4 percent to 10,896.91, up 148.65 points, while the Standard & Poor's 500 index rose 1.4 percent to 1,171.67, up 15.88 points. The Nasdaq composite index fueled the rally with a 2.1 percent jump to 2,425.02, a gain of 49.71 points.

Among tech winners, China's big search company Baidu soared 9.6 percent to $78.30 following a 10-for-1 split to make the shares more widely available to investors. Strong earnings outlooks also boosted US tech giants, such as IBM, which jumped 4.6 percent to $132.68 after it issued an upbeat outlook, and Intel, up 3.6 percent to $23.09.

Investors also took some solace from a report yesterday that showed the eurozone's GDP rose a bigger-than-expected 0.2 percent, indicating that despite the rampant worries about the region's debt loads there are signs economies there are beginning to turn a corner.

In addition, Spain unveiled its own belt-tightening measures, including laying off 13,000 civil servants, cutting public-sector wages by 5 percent and imposing a hiring freeze next year and paring back the country's generous pension plan.

Further, Portugal was able to raise $1.3 billion in new cash at much lower interest rates than expected, with a 10-year bond offering yielding 4.5 percent vs. 6.3 percent a year ago.
Borrowing costs for Spain and Italy also dipped below 4 percent.
However, that positive news wasn't enough to staunch a slide in the euro, which retreated yesterday to $1.2628, and is down 12 percent this year against the dollar.

"I still think the euro is going to continue to slide," said currency trader Fabian Eliasson at Mizuho Corporate Bank. With Post wires
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