Gold reaches another high
GOLD struck another record high yesterday, continuing its shining run as investors flock to find a safe investment for their money.
The precious metal’s latest high – now $1,217.23 an ounce – comes after a series of peak trading prices in recent weeks driven by a weaker dollar, and more recently, fears over Dubai’s debt repayments.
The flight to safety after investors pulled money from shares on renewed fears over bank lending was also seen in other precious metals like silver, which was just five per cent off its all time high at $19 an ounce. Gold also hit a record high in yen, euro and sterling.
The falling value of the dollar is a key reason for the gold rush. With the US maintaining low interest rates, the currency is less attractive to those looking to invest.
The Federal Reserve in the US has kept benchmark interest rates near to zero since December last year in a bid to resuscitate lending after the financial crisis.
Gold is a popular hedge against currency weakness, and the US dollar has slumped 14 per cent against the pound, and eight per cent against the euro this year.
The commodity is also doing well because of speculation, and analysts and investors worldwide predict the precious metal will keep rising further.
Gold’s strong performance has attracted new players and increased inflows of money into the market.
Earlier this week, Goldman Sachs raised its forecast for the average price of gold in 2010 by 14 per cent to $1,099 an ounce.
Governments in emerging markets have also been adding gold to their reserves.
On Tuesday this week, gold again hit what was then a record high of $1,198.70 an ounce in Europe, as the dollar weakened against a basket of major currencies.