BREAKING NEWS

Gold sets record $1,800 on French bank fears

By REUTERS

AUGUST 10, 2011 22:25

NEW YORK/LONDON - Gold climbed to a third record in a row over $1,800 an ounce on Wednesday, extending its biggest rally since 2008 as a dive in French bank stocks sent new shudders through anxious financial markets.

Although it pared gains late in the day as equity markets pulled up from initial deep losses, gold's long rally showed few signs of letting up as the locus of traders' euro zone debt fears shifted from Spain and Italy to France, which traders fretted could be next in line for a debt crisis.

The jitters overshadowed the US Federal Reserve's unprecedented decision to promise near-zero interest rates for two years. The announcement was a double-edged sword for gold, which retreated during Tuesday's late Wall Street rally but would also benefit from a prolonged low-yield environment.

Spot gold rose more than 3 percent to hit a high of $1,796.86 an ounce, but pared gains to stand 1.5 percent higher at $1,769 by 2:37 p.m. EDT. It also hit record highs in euro and sterling terms. US COMEX gold futures briefly topped $1,800, then settled at $1,784.30, up 2.4 percent.

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