Gold Advances to Record as U.S. Credit-Rating Cut Boosts Demand for Haven

Gold climbed above $1,700 an ounce for the first time after Standard & Poor’s cut the top U.S. credit rating, fueling a slump in equities and the dollar amid concern that the global economy is slowing.

Gold futures for December delivery jumped 3.1 percent to a record $1,702.70 an ounce on the Comex in New York and traded at $1,701.90 at 2:07 p.m. in Melbourne. Silver futures climbed as much as 5.7 percent. Spot gold soared 2.2 percent to $1,700.22 an ounce, also a record.

Futures have surged 20 percent in 2011, gaining for an 11th year, as the sovereign debt crisis and a faltering economy boost haven demand. While George Soros sold most of his gold in the first quarter, John Paulson, who made $15 billion betting against subprime mortgages, is still the biggest investor in the largest exchange-traded fund backed by bullion. Goldman Sachs Group Inc. (GS) raised its price forecasts in a report released today.(Bloomberg)