Gold prices edged higher Tuesday morning and are poised to climb on the latest damage inflicted by the sovereign debt crisis: Standard & Poor's ratings service reduced the sovereign debt rating of Italy, Dow Jones Newswires reports.
Bloomberg reports the rate cut might prompt an increase in regional borrowing costs. Yet Tuesday's increase in gold price after Monday's decrease by 2 percent is certainly welcome to gold bugs.
"Continued concerns over euro-zone sovereign debt are likely to drive gold higher before policy makers are forced to take more effective action," states a Tuesday report by chief commodity analyst Bjarne Schieldrop of SEB AB. "Under current circumstances, a long position in gold is highly recommended."
At 8:43 a.m. on Tuesday, gold futures increased 0.75 percent, a $13.40 lift to $1,792.30 per troy ounce.
The precious metal appears to be driving back toward the $1,800-per-troy-ounce threshold but bullion's recent record of volatility is uncharacteristic. The record price of $1,923.70 per troy ounce was set on September 6 but stock markets have lost and gained while the value of the dollar has done the same, compromising the yellowish metal's stability.
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