Daily Gold Update

Source: Marketwatch

San Francisco— Gold prices soared to a record above $1,700 an ounce Monday as Standard & Poor�s downgrade of the U.S. credit rating amplified worries about the global economic outlook, attracting investors to the metal�s safe-haven status.

Gold for December delivery advanced $46.40, or 2.8%, to $1,698.70 an ounce on the Comex division of the New York Mercantile Exchange. It rose as high as $1,718.20 an ounce, an intraday record, in Asian trading hours. The contract added $66.40, or 4%, from Friday�s lackluster closing. The latest rally for gold came in the wake of S&P�s downgrade late Friday of U.S. credit rating, to AA+ from AAA. Hefty losses for U.S. stocks at Wall Street�s open aided the surge. Analysts at Goldman Sachs , for one, see further upside for the precious metal.

Gold prices will �continue to climb in 2011 and 2012 given the current low level of U.S. real interest rates,� they wrote in a note Monday. �The downgrade will no doubt weigh further on the already very negative sentiment toward the [U.S. dollar] and accelerate the pace of reserve diversification� away from the greenback, Bank of America Merrill Lynch analysts wrote in a note.

The U.S. dollar index, which measures the greenback against a basket of six currencies, climbed to 74.845 from 74.592 late Friday.

The dollar index had lower earlier, further underpinning gold. Gold prices and the U.S. currency often tend to move in opposite directions, as the metal�s dollar-denominated price is used as the international benchmark and a higher dollar means a higher price for holders of other currencies.

U.S. stocks opened broadly and sharply lower, and Treasurys rallied, also reacting to the S&P downgrade. Read more about stocks.

Asian and European stocks got a black eye as investors dumped equities and pared exposure to risk assets.

Silver tracked gold higher, with the September contract adding $1.05, or 2.8%, to $39.27 an ounce. October platinum added $5.30, or 0.3%, to $1,723.40 an ounce

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