Is inflation and gold on the rise??
*Financial Times, by Neil Dennis & Chris Flood, January 8, 2008
“Inflation Fears Drive Gold to New Record
Gold prices soared to a new record on Tuesday, driven higher by rising geo-political tensions in the Gulf, inflation concerns and by investors seeking a safe haven from volatility in equity markets.
Gold hit a record $875.80 a troy ounce in Asian trade before easing back in European trading to $872.60, up 1.5 per cent from New York’s late quote of $859.70 on Monday.
The recent assassination of Benazir Bhutto in Pakistan provided a catalyst for gold to break through its previous high of $850, set in January 1980.
Geo-political tensions have also been heightened by news on Monday that US naval ships in the Strait of Hormuz in the Gulf came close to firing on five Iranian boats which reportedly threatened them.
Fears that high commodity and food prices will push inflation higher while US economic growth slows has also helped the precious metal. So-called ”stagflation” is negative for the US currency, which makes the dollar-priced metal cheaper to buy in other currencies.
After rallying in recent sessions, the dollar turned lower again on Tuesday, falling 0.3 per cent against the euro.”
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