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Lower Portugal’s Rating Weakens Crude & Copper, Helps Gold

July 7, 2011 at 0:37 by Vladimir Vyun

Crude oil and copper fell as Moody’s Investor Service cut Portugal’s credit rating yesterday. The resulting surge of demand for a safe haven helped gold to gain for a second day.

Moody’s downgraded the credit rating of Portugal from Baa1 to Ba2 and issued a negative outlook yesterday. The agency explained this decision by concerns that the nation will require another bailout, but hasn’t achieved the target of deficit reduction and debt stabilization set by the European Union and the International Monetary Fund.

Demand for industrial metals and fuel also declined after China increased its interest rates.

August contract for gold delivery gained $16.50 (1.1 percent) to $1,529.20 per ounce as of 13:43 on COMEX. August futures for crude oil delivery dropped $0.24 to $96.65 per barrel on NYMEX. Contract for delivery of copper in three months fell 0.5 percent to $9,493 per metric ton before trading at $9,514.5 per ton on LME.

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