Gold settles higher, copper finishes at lowest since November 2010

Gold futures advanced 1.7% Tuesday, regaining the $1,800-an-ounce mark as bargain hunters returned to the metal, fears remained about Europe’s sovereign-debt crisis, and investors expected the U.S. Federal Reserve soon to announce steps to improve the economy.

Gold for December delivery rose $30.20, or 1.7%, to settle at $1,809.10 an ounce on the Comex division of the New York Mercantile Exchange.

“There’s some move to safety” as Europe’s sovereign-debt crisis continues, said Tom Pawlicki, analyst with MF Global in Chicago.

Investors were also factoring in some announcement of economic stimulus on Wednesday, when the Fed concludes its two-day policy meeting. The expectation of more stimulus touches on fears of fiscal profligacy, one of the pillars of gold investing.

The contract fell $35.80, or 2%, on Monday to finish at its lowest level in more than three weeks as a stronger U.S. dollar pressured commodity prices, and investors were also biting back into the market after the retreat.

Late Monday, Standard & Poor’s Ratings Services cut Italy’s long-term credit rating, to A from A-plus. It also cut its short-term rating to A-1 from A-1-plus, citing a weak economic outlook and prospects for ongoing political gridlock.

The rating cut “doused cold water over Italy’s capacity to address their public finances,” analysts at GoldCore said in a note to clients Tuesday.

“As long as governments cower from their responsibilities to balance their budgets and continue to print money instead of paying their bills, gold will likely appreciate in paper money terms,” they said.

In the medium term, gold is likely on a down trend, partly because it has failed to take out highs reached in late August, Pawlicki said.

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