Gold prices rose to a 4 1/2-year high as the threat of war between India and Pakistan prompted buying by investors seeking a haven.
The countries traded artillery fire over their border in Kashmir, as the US and Russia intensified efforts to stop the nuclear-armed neighbors from going to war. Concern about possible disruptions to financial markets because of the conflict increased buying of gold by investors who already had been attracted to the metal as an alternative to stocks.
"The threat of war in Kashmir is supporting the gold price," said Donald Eckert, head of precious-metals trading at JP Morgan Chase & Co in New York. "Most of the investment buying we've seen over the past three weeks has been out of New York."
Gold for August delivery rose US$0.80 to US$327.50 an ounce on the Comex division of the New York Mercantile Exchange
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