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Cut of US Rating Outlook by S&P Spurs Gold to New Record

April 18, 2011 at 19:26 by Vladimir Vyun

Gold reached new record today after Standard & Poor’s downgraded the outlook for the US credit rating. S&P confirmed the US rating of AAA/A-1+, yet put the outlook to negative. It cited the bid budget deficit of the US, compared to other developed nations.

S&P explained why the issue wouldn’t likely be fixed in the near future:

We believe there is a material risk that U.S. policymakers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013; if an agreement is not reached and meaningful implementation is not begun by then, this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer ‘AAA’ sovereigns.

June futures for gold delivery gained $6.90 (0.5 percent) to $1,492.90 by 14:04 on COMEX. Contact for immediate delivery of gold jumped 0.8 percent to the record of $1,497.90 in London.

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