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Gold futures top USD1,780 on increased safe haven demand

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Forexpros - Gold futures extended earlier gains on Tuesday, hitting a three-day high after weaker-than-expected growth data out of Germany and the wider euro zone added to fears over global growth prospects, boosting the safe haven appeal of the precious metal.

On the Comex division of the New York Mercantile Exchange, gold futures for October delivery traded at USD1,781.65 a troy ounce during U.S. morning trade, climbing 1.44%.

It earlier rose as much as 1.65% to trade at USD1,783.45 a troy ounce, the highest price since August 11.

Data released earlier showed that German economic growth nearly stalled during the second quarter, increasing by 0.1%, compared to growth of 1.3% in the preceding quarter and below expectations for a 0.5% increase.

A separate report said that the euro zone's gross domestic product increased by 0.2% during the second quarter, slowing from growth of 0.8% in the preceding quarter and below expectations for a 0.3% gain.

The downbeat data added to worries over growth prospects for the single currency bloc amid the region's ongoing sovereign debt crisis.

Markets were also awaiting a meeting between German Chancellor Angela Merkel and French President Nicolas Sarkozy in Paris later in the day to address the region's debt issues.

Meanwhile, the U.S. Census Bureau said earlier that the number of building permits issued in the U.S. fell 3.2% to a seasonally adjusted 0.60 million in July, down from 0.62 million in June.

Analysts had expected building permits to decline 1.9% to 0.61 million units in July.

U.S. housing starts fell 1.5% in July to hit a seasonally adjusted 0.60 million, broadly in line with expectations. The previous month's figure was revised down to 0.62 million from 0.63 million.

Gold is considered a refuge from financial risk and a haven against economic and political uncertainty.

Gold futures shrugged off an announcement from ratings agency Fitch's affirming the U.S. AAA credit rating with a 'stable' outlook, reflecting the country's "pivotal role in the global finance system".

Elsewhere on the Comex, silver for September rose 0.95% to trade at USD39.85 a troy ounce, while copper for September delivery dropped 1.37% to trade USD3.977 a pound.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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