Gold rose Tuesday in U.S. trading, the result of growing pessimism about the ability of the domestic economy to create jobs and worries that European leaders are unable to contain, let alone fix, the Greek sovereign debt crisis.
U.S. stock futures were down, and equities in Asia and Europe posted losses. Bank stocks led Europe's declines, reflecting investor worries that the continent's biggest financial institutions are vulnerable to the spreading contagion of sovereign debt risk.
What began as a Greek debt crisis problem has morphed into a Portugese problem, then into an Irish one, and a Spanish one and most recently an Italian problem. In each of those countries, the interest rate that traders are demanding to hold those governments' debt is shooting ever higher and exposing European banks -- which hold much of this suspect sovereign debt -- to huge losses.
"Market concerns have resurfaced regarding the euro debt struggles and global economic stability. This is driving fear among investors and bringing an atmosphere of reduced equity exposure," Andre Bakhos, director of market analytics at Lek Securities in New York, told Reuters.
"These concerns have not left the market, they have only been diverted by a lack of headline prominence, and now they are coming back to start the negative cycle all over again."
In morning trading, gold for December delivery, the most actively traded contract on the CME Comex division of the New York Mercantile Exchange, rose $20.50, or about 1 percent, to $1,897.40 an ounce. Gold for immediate delivery was $1,889.41 an ounce.