NEW YORK (Reuters) - Gold rallied on Friday to near a record high, posting its biggest three-week gain since November as investors cut exposure to risks stemming from Greece’s debt crisis and tumbling global stock markets.
Gold futures rallied in afternoon trade to the firmest since December 4 as volatile equities and currencies prompted nervous anxious investors to buy gold.
Investors piled into gold exchange traded funds and coins and bars, with bullion holdings in the biggest gold-backed ETF rising 20 tons on Thursday, the biggest one-day gain since February 2009.
“As a currency hedge and non-correlated asset, gold provides diversification as people are worrying about the euro, sovereign debt and the impact to the euro zone,” said Dan Denbow, co-manager of the USAA Precious Metals and Minerals Fund (USAGX.O), which has $1.56 billion in mutual fund assets.
“When you see the dollar and gold moving together, that’s a real indicator of safe-haven trade.”
Spot gold was at $1,209.65 an ounce at 3:45 p.m. EDT (1945 GMT), against $1,207.25 late in New York on Thursday. U.S. June gold futures on the COMEX division of the NYMEX settled up $13.10, or 1.1 percent, at $1,210.40 an ounce.
U.S. gold coin sales also surged, as the U.S. Mint sold gold coins this week at twice its normal pace, and a leading retailer said Thursday was a record day. <ID:N07627392>
“Yesterday was our biggest day of the year in terms of investors buying gold,” said David Beahm, vice president of marketing at top U.S. retail gold coins dealer Blanchard & Co.
While oil fell for a fourth straight day on Friday and U.S. stock indexes have wiped out all of this year’s gains, gold has gained as much as $50 an ounce in the past two days, underscoring skittishness and mounting worries about euro zone contagion from Greece’s debt problems.
“Gold is now enjoying safe-haven status, partly because bonds, particularly peripheral euro zone government and bank paper, are no longer a safe haven,” said Citigroup analyst David Thurtell.
The euro recovered from a 14-month low against the dollar, but the single currency was still headed for its worst week against the dollar since October 2008. <FRX/>
Investors expect gold to move higher after consolidating near $1,200. The precious metal has risen more than 4 percent this week. Gold is now about $20 below an all-time high of $1,226.10 an ounce set on December 3.
Some analysts questioned whether gold can sustain its rally. They cited signs of stalling investment demand.
Holdings of the world’s largest gold exchange-traded fund, the SPDR Gold Trust, jumped nearly 20 tons to a record 1,185.787 tons on Thursday. Year to date, however, GLD holdings has gained just 50 tons. <GOL/SPDR>
For precious metals with strong industrial demand component, silver was at $18.32 an ounce against $17.61. Platinum rose to $1,660.50 an ounce from $1,625, while Palladium was at $510, higher than the $502.50 late in New York on Thursday.
Additional reporting by Jan Harvey in London; Editing by David Gregorio