(Kitco News)-- Gold’s role as a safe haven has returned to the forefront amid concerns about the European banking sector, says Sean Lusk, stock-indices specialist who also tracks metals for with PFGBest. Germany’s banking association says the country’s largest banks may need additional capital under revamped rules, while a Wall Street Journal report said stress tests of European banks understated holdings of potentially risky government debt. The dollar is sharply higher against the euro as a result. “That would put some heat on gold on a normal day,” Lusk says. “But you’re seeing a lot of people rush into gold because of the fear.” Thus, gold and silver are “charging up on safer-haven plays” while equities and crude oil weaken on worries the banking issues will hurt the economy. Spot gold is $11.20 higher at $1,257.80 an ounce, while silver is 9 cents higher at $19.94.

By Allen Sykora, of Kitco News; asykora@kitco.com

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Editor’s Note: Meet the Kitco News Team at the upcoming Kitco Metals eConference September 12-13, 2010. A not-to-be missed event featuring Ron Paul, Marc Faber and other industry heavyweights. The eConference is free with Pre- Registration http://www.kitcoeconf.com/.