Gold Surges to Record on Haven Demand as Economy Falters, Equities Tumble (Nicholas Larkin and Debarati Roy)

Aug. 18, 2011 (Bloomberg) -- Gold futures surged to a record $1,829.70 an ounce on demand for an investment haven as mounting concern that the global economy is faltering triggered a plunge in equities.

The Standard & Poor’s 500 Index tumbled as much as 5 percent after manufacturing in the Philadelphia region unexpectedly contracted in August by the most in two years as orders plunged and factories shed workers. Europe’s debt crisis may freeze interbank markets and cut off funding, said Lars Frisell, the chief economist at Sweden’s financial regulator.

“There is further decay in the European situation,” Sterling Smith, an analyst at Country Hedging Inc., said in a telephone interview from St. Paul, Minnesota. “The nervousness in the equity markets is pushing people toward gold.”

Gold futures for December delivery jumped $28.20, or 1.6 percent, to settle at $1,822 at 1:45 p.m., on the Comex in New York, closing at an all-time high for the third straight day. The price has advanced 28 percent in 2011, after posting gains in the previous 10 years.

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