Gold futures climb for third day as Greece default fears deepen

Forex News – Gold futures were sharply higher on Monday, climbing to a three-day high as concerns over the worsening euro zone sovereign debt crisis and a possible Greek default boosted the safe haven appeal of the precious metal.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,651.65 a troy ounce during U.S. morning trade, jumping 1.8%.

It earlier rose by as much as 2.77% to trade at USD1,666.35 a troy ounce, the highest price since September 28.

Gold prices were boosted as concerns mounted over a possible Greek debt default after the Greek government said Sunday it will miss its deficit reduction targets for both this year and next.

Inspectors from the International Monetary Fund, the European Union and the European Central Bank continued talks in Athens, on whether the country is eligible to receive its crucial EUR8 billion installment of aid this month.

According to reports, Greece needs the latest round of aid to avoid running out of money by mid-October.

Gold traders will pay close attention to a meeting of finance ministers from the single currency bloc later in the day to discuss options for increasing the capacity of the EFSF.

European banking giant HSBC said that, “gold stands to benefit should investors continue to be disappointed by political progress in combating Europe's fast-moving sovereign debt crisis.”

Strong physical demand also supported prices. According to data released earlier from the Istanbul Gold Exchange, gold imports in Turkey rose to 18.23 tonnes in September, the highest in three years. Turkey is the world’s third largest gold consumer, trailing India and China

Gold futures came off their highs after the U.S. Institute of Supply Management said its manufacturing purchasing managers’ index rose to 51.6 in September from 50.6 in August, confounding expectations for a decline to 50.5.

Elsewhere on the Comex, silver for December delivery jumped 2.03% to trade at USD30.69 a troy ounce, while copper for December delivery pulled back from a 14-month low to trade at USD3.137 a pound, shedding 0.47%.