Will global demand for gold bullion make prices breach all-time highs?
*Reuters, by Jan Harvey, January 26, 2009
“Gold climbed above $900 an ounce on Monday to its highest level in more than three months, as interest in bullion as a haven from risk spurred buying, and the dollar weakened against the euro.
Spot gold was at $903.15/904.75 an ounce at 1358 GMT, up from $898.10 in New York late on Friday. Earlier it peaked at $908.65, its firmest level since October 10.
U.S. gold futures for February delivery on the COMEX division of the New York Mercantile Exchange were up $7.50 at $903.30.
Gold priced in euros reached an all-time high of 701.55 an ounce, and in sterling of 661.55 pounds, as fears over the global economic slowdown and volatility in other asset prices spurred buying.
‘Gold is rising on the fallout from the renewed banking crisis,’ said VM Group analyst Matthew Turner. ‘The banking crisis is bad for share prices, and creates fear and panic. Some investors are thinking gold is the safest option.’
The dollar, weakness in which usually benefits gold, also softened against the euro on Monday as the single currency recovered from an earlier near six-week low against the U.S. unit.
Gold was already benefiting from increased interest from investors seeking a haven from risk, amid fears over the deteriorating economic outlook.
An International Monetary Fund official said on Sunday that the IMF will cut its 2009 growth forecast again by between 1 percent and 1.5 percent as economic conditions weaken further.
Against this backdrop, demand for physical gold both from investors in smaller products such as coins and bars and from exchange-traded funds remains firm.
Investors are seeking the safety of physical bullion as other asset prices met fresh volatility, analysts said.”
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