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Gold rises as consumer confidence weakens

AP -- Gold prices rose 2 percent Tuesday as consumer confidence fell on both sides of the Atlantic.

Two independent reports concluded Americans and Europeans are worried about jobs, volatility in the financial markets and economic growth. Investors tend to buy gold when they're worried about how the economy is doing or when financial markets are volatile.

In the United States, The Conference Board said its Consumer Confidence Index fell to 44.5 in August, the lowest level since April 2009 . A reading above 90 indicates the economy is on solid footing. The survey was done earlier this month as Standard & Poor's downgraded the U.S. government's debt and as concerns grew about Europe's sovereign debt problems. The stock market was also in turmoil.

The European Union's business and consumer economic sentiment index fell 4.7 points to 98.3, the sixth consecutive decline, bringing the indicator below its long-term average of 100.

Economic leaders said consumers were worried about jobs; retailers were more pessimistic about the economy and industrial managers were concerned about a decline in export orders and the potential for overstocked inventories.

Gold for December delivery rose $38.20 to end at $1,829.80 per ounce. The price has increased 13 percent this month.

The Conference Board report was released a day after the U.S. government said consumer spending increased 0.8 percent in July, the largest increase in five months. It was the earlier report that sent industrial metals higher Tuesday, MF Global senior commodities analyst Edward Meir said.

"Consumer confidence usually is not a good indicator of spending," he said. "People may say they don't feel great but they still spend."

Silver for September delivery increased 85.2 cents to end at $41.398 per ounce, September copper rose 3.4 cents to $4.123 a pound, October platinum rose $28.10 to $1,853.10 per ounce December palladium rose $23.55 to $779.30 an ounce.

In other trading, oil prices rose 2 percent as traders speculated that supplies may be tighter after Hurricane Irene forced several refineries and petroleum terminals to reduce production or shut down.

Benchmark crude rose $1.63 to end at $88.90 per barrel on the New York Mercantile Exchange.

In other Nymex trading, heating oil rose 5.94 cents to finish at $3.0767 per gallon, gasoline futures rose 7.2 cents to $2.8415 per gallon and natural gas increased 7.9 cents to $3.909 per $1,000 cubic feet.

December wheat fell 4.25 cents to finish at $7.9075 a bushel, December corn rose 5.25 cents to $7.7525 per bushel and soybeans increased 10 cents to $14.57 per bushel.