London: Gold prices rose in Europe yesterday as fears that Greece could be heading for a default, potentially sparking a banking crisis in Europe, hurt stock markets and prompted investors to seek out assets seen as lower risk.
European shares fell 2.25 per cent in early trade, while the Stoxx Europe 600 Banking Index tumbled as much as 4 per cent. World stocks hit a fresh 15-month low.
Spot gold was up 0.7 per cent at $1,668.19 (Dh6,126) an ounce at 0907 GMT. Other assets seen as a relatively safe store of value, such as German bunds and the Swiss franc, also climbed.
Investors are still wary towards gold after it was caught up in a broad-based financial market rout in late September, which saw heavy selling of the metal to cover losses on other markets. Prices fell 20 per cent from the record $1,920.30 an ounce they hit early in the month.
"There is still potential for further slides should profit taking again set in. I'm not really convinced gold weakness is over," said Commerzbank analyst Eugen Weinberg. "But gold is definitely living up to its status as a safe haven at the moment. That is very reassuring for investors."
Metals fall
Despite putting in its weakest performance in nearly three years in September, gold still managed to deliver its biggest quarterly gain of 2011 in the third quarter, and is up more than 15 per cent so far this year.
This is despite some gains in the dollar, which has inched up 1.5 per cent this year versus the euro. Gold is usually pressured by a stronger dollar, which makes it more expensive for other currency holders.
Among other commodities, oil and industrial metals like copper and nickel fell as worries over the economic outlook hurt demand expectations for raw materials.
